25C provides a 30% tax credit for residential energy efficiency and electrification upgrades, up to $3,200 per year. The biggest credit is for heat pumps and heat pump water heaters, which is capped at $2,000. Other upgrades could get you up to $1,200 in credits, depending on the upgrade.

25D provides an uncapped 30% tax credit that covers purchase and installation costs for rooftop solar, battery storage, and geothermal heating. It also includes electrical panels if they’re installed along with one of those systems.

The Home Energy Rebates are another part of the IRA, designed to make the up-front costs of energy-efficient upgrades more affordable. These rebates aren’t available yet, but are expected to be available in late 2023 or early 2024. There are two parts: Electrification Rebates and Efficiency Rebates.

Electrification Rebates aim to get low- and moderate-income homeowners to install energy-efficient appliances and machines. Households with less than 80% of the area median income (AMI) are eligible for rebates that cover up to 100% of a project’s purchase and installation costs (up to $14,000). Households with between 80% and 150% of AMI can get rebates for up to 50% of the costs. Households that make more than 150% of AMI aren’t eligible for Electrification Rebates.

Efficiency Rebates are for whole-house, energy-saving retrofits, and the amount depends on how much energy your new system is expected to save. There’s no income cap, and incentives are doubled for low-income households that make less than 80% AMI.

To be eligible for tax credits, homeowners must have tax liability, which means they owe federal taxes that are higher than or equal to the value of the credit they’d receive. To be eligible for the Electrification Rebates, homeowners must make 150% or less of the Area Median Income (AMI). All homeowners are eligible for Efficiency Rebates regardless of income. When the Electrification and Efficiency Rebates become available, they’ll be administered by individual states, so some of the details may differ.