Looking for Inflation Reduction Act Rebates to Go Green? Get Ready to Wait

For Americans with a New Year’s resolution to trade in their gas furnace or water heater for climate-friendly heat pumps, a word of caution: Generous Inflation Reduction Act rebates for home electrification took effect on Jan. 1, but they won’t actually be available to homeowners until year’s end or 2024 at the earliest, according the US Department of Energy.

That’s because the Biden administration is distributing $4.3 billion in home electrification rebates through state energy offices. In other words, 50 different programs need to be designed and implemented so that they comply with federal regulations, which reserve the incentives for families earning up to 150% of their area’s median household income.

The good news is that rebates worth up to $14,000 to slash the cost of decarbonizing a home are expected to be available for years to come, at least until the budget runs out. The bad news is that if your fossil-fuel furnace or hot water heater fails before state programs are up and running, the rebates won’t be retroactive. That means homeowners could lock in another decade or two of greenhouse gas emissions if they can’t afford unsubsidized heat pumps.

“Given that states must establish programs that ensure compliance with the law (e.g., eligibility of household, technology, program reporting), it will be difficult to offer rebates for projects completed before program requirements are fully defined and programs are in place,” the DOE’s Office of State and Community Energy Programs says on its website. It adds: “The law does not authorize states to offer home electrification rebates retroactively.”