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New tax credits (and more) are on the way. Here’s what it could mean for your finances.

If you’ve been thinking about making energy-efficient upgrades — from an electric vehicle to solar panels on your home, you and your wallet may be in luck. On August 16, 2022, President Biden signed the Inflation Reduction Act, a bill designed to lower energy and other costs for millions of Americans.

The four areas below highlight what the bill could mean for your finances now and in the future, and where you might see the biggest financial impact to your wallet.

1. Energy-efficient home improvements: Tax credits and rebates

A big part of the Inflation Reduction Act focuses on supporting clean energy production; in fact, it’s the most significant piece of federal legislation to address climate change.1 That includes providing incentives for consumers in the form of tax credits and rebates that not only make “going green” easier and less expensive, but also help reduce your energy bills.

If home improvements or replacing your old appliances with new, more energy-efficient models are on your to-do list, these new financial incentives could make that task easier on your budget.

  • You can take advantage of a tax credit equal to 30% of what you spend on qualified energy-efficiency improvements like windows, doors and insulation, or energy-efficient appliances that heat or cool your home, such as water heaters and heat pumps. The tax credit also applies to home energy audits that help you determine which improvements could help you save the most energy and money.
  • A tax credit for the installation of solar panels was increased to 30% and extended through 2032.
  • Rebates based on reduced energy consumption. For example, if your household makes energy-efficient changes that reduce energy usage by at least 35%, you could be eligible for up to $4,000 in rebates.
  • Rebates of up to $14,000 for low- and middle-income families who purchase energy-efficient electric appliances to help reduce their home energy use, like stoves and clothes dryers.2 The rebates can range from $840 for an electric stove to $8,000 for a heat pump.
  • Tax credits versus rebates — what’s the difference?
    A rebate is typically a reimbursement you get when purchasing the item. A tax credit is an amount you subtract from what you owe when you file your taxes. It’s a good idea to consult with your tax advisor to ensure you’re taking advantage of any available tax credits.

Some items noted above may have annual credit caps, and some rebate programs are still being implemented and aren’t yet available. In the meantime, you can start thinking about your current energy usage and what energy-efficient upgrades make the most sense for your family — so you can take advantage of any financial incentives that can help lower your energy bills.

2. Electric vehicle (EV) tax credits

If you’re car shopping, you now have more of an incentive to consider an electric vehicle, since tax credits have been expanded for qualifying EVs: A $7,500 tax credit for new and a $4,000 credit for used. Income and vehicle sales price restrictions may apply.

3. Healthcare savings

The Inflation Reduction Act will continue to save millions of Americans an average of $800 per year on health insurance premiums.2 In addition, millions of Americans who are Medicare recipients will soon see lower costs and automatic savings:

  • Lower prices on Medicare premiums3 and on many prescription drugs2
  • Out-of-pocket costs for prescription medications will be capped at $2,000 per year2
  • Out-of-pocket insulin costs for those with diabetes capped at $35 per month2

4. Investments in tax reform

The Inflation Reduction Act includes investments in the Internal Revenue Service (IRS) to provide consumers with:

  • Faster tax filing and tax-return processing
  • Faster refunds
  • More responsive IRS agents and customer service representatives
  • No federal tax increases for anyone making under $400,000 per year1

When could the Inflation Reduction Act help me save money?

Americans could save anywhere from hundreds to thousands of dollars in the form of rebates, tax credits, lower energy bills and reduced healthcare expenses. However, some financial benefits will be available sooner than others. For example, you may be able to take advantage of eligible energy-related and EV tax credits and healthcare premium savings now, while other programs and savings, like energy-related rebates and lower prescription drug costs, will be available in the near future.

If you’re planning to purchase a car or upgrade your home, consider the financial incentives as well as the potential savings opportunities of becoming more energy efficient — and start planning now to take advantage of the savings available to you.

Also see:


  1. “Statement of Administration Policy: H.R. 5376 — Inflation Reduction Act of 2022,” The White House,
  2. “By The Numbers: The Inflation Reduction Act,” The White House,
  3. “What the Inflation Reduction Act Means for Your Medicare Coverage,” NerdWallet,
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