How the Inflation Reduction Act could reimburse NC residents for saving energy
After more than a year of negotiations over the costs of the Inflation Reduction Act, President Biden signed the bill into law on Tuesday after it passed in Congress last week. The extensive legislation addresses taxes, healthcare, and climate initiatives.
The new legislation will “lower costs for families, combat the climate crisis, reduce the deficit, and finally ask the largest corporations to pay their fair share,” The White House said in a statement.
Although it’s a much slimmer version of Biden’s Build Back Better plan, the Inflation Reduction Act of 2022 still has a hefty price tag, reserving almost $370 billion for climate change alleviation.
A portion of those funds will go towards lowering energy costs and emissions for individuals, effectively saving money for many families in North Carolina and across the country.
Here are a few ways people can get paid with tax credits and rebates to help battle climate change:
Energy-efficient home improvements
According to the Inflation Reduction Act, the non-business energy property credit -- a credit that was eliminated last year -- will officially be reinstated.
North Carolina homeowners who make energy-efficient home improvements, such as replacing leaky doors or upgrading to more environmentally-friendly appliances, will be able to claim up to $1,200 a year or 30% of improvement costs through tax credits.
Homeowners who make up to 80% of the median income in their area will be able to claim the most for these improvements, NPR reported. Rebates for upgraded energy-efficient appliances will be available through the act and range from $1,750 to $4,000.
Solar power installation
Homeowners who are able to switch to solar power will also see a benefit thanks to the new legislation. According to the Inflation Reduction Act, filers who made renewable energy shifts, such as the installation of solar energy and energy storage systems, will be eligible for a strengthened tax credit.
The credit allows North Carolinians to receive up to 30% of their energy costs through their tax filings and extends from improvements made at the beginning of 2022 all the way to the end of 2034.
Electric Vehicles and the Clean Vehicle Credit
The new law takes the already existing Qualified Plug-in Electric Drive Motor Vehicle Credit and adds a new stipulation for those who want to claim the credit for their electric vehicles.
The Inflation Reduction Act also states that in order to be eligible for the credit during filing season, final assembly of the vehicle must take place in North America.
Furthermore, eligible claimants cannot make more than $300,000 a year in joint income and the credit is only reserved for buyers of cars that sell for less than $55,000, or $80,000 if the vehicle is a truck, an SUV, or a van.
For drivers who signed a contract for an electric vehicle before Aug. 16 but did not claim possession of the car until after the Inflation Reduction Act was signed into law, rules from before the legislation took effect will apply, McClatchy reported.
As for authenticating the eligibility of your vehicle, TurboTax encourages buyers to pay attention to the certification provided to them by their car’s manufacturer. This certification includes pertinent information about the vehicle as well as an indication of whether or not the vehicle meets tax credit eligibility requirements.
This story was originally published August 19, 2022 at 7:00 AM.
