Most Americans are still feeling the pain of inflation, including the increasing cost of utilities. Monthly utility bills are a significant part of the average American’s household budget. This is one area of spending where there is a beacon of relief on the horizon.

The U.S. government has enacted the Inflation Reduction Act, a significant step designed to reduce carbon emissions and help U.S. residents reduce their utility expenses. This act includes the allocation of $400 billion to support clean energy projects to address climate change, with $8.8 billion earmarked for home energy rebates for energy efficiency and electrification projects. It also offers additional incentives, such as federal tax credits for qualifying energy retrofit projects. The goal is to inspire American households to invest in energy efficiency measures, reducing carbon emissions and utility bills.

The Department of Energy reports that roughly one-third, or more, of our total energy is wasted and is not converted into usable energy. As an example, for every dollar spent, only $0.60–$0.70 of that is actual usable energy. And this is looking at the top end of energy efficiency. Some homes are about 50% efficient when it comes to energy consumption. The IRA aims to tackle the older housing stock nationwide, offering a path to significant savings for homeowners.

When older homes were constructed, the building codes did not account for the advanced building science developments available today. Older homes are more expensive to operate compared to newer homes, but the problems with older homes can be resolved, and the potential for significant savings is within reach.

Rebates and Tax Credits

The government is providing rebates and tax credits to incentivize homeowners to invest in energy efficiency via retrofit projects in the core areas where the most energy is consumed, including upgrading water heaters, heating and cooling systems, attic and wall insulation, and major appliances. This federal program is administered to each individual state and is intended for homeowners to invest in a qualified energy retrofit project.

Home Energy Audits

Some homeowners attempt to take matters into their own hands by researching and trying DIY repairs, or they may contact a professional contractor and try to solve one specific problem. However, it is important to remember that professional guidance is key to making the right investments. Sometimes, a homeowner will make a significant investment in one area only to find that they have tackled the wrong issue, so their bills are still high. For example, an individual may suspect they need new windows, but the issue is actually a lack of insulation. Before investing in a home energy retrofit, a professional energy expert should be sought to ensure investments are targeted at projects that will be genuinely beneficial.

A home energy audit is a comprehensive evaluation of a home. An energy auditor is the person who conducts an energy audit. The DOE features a list of qualified certification programs for home energy auditors that taxpayers can use to claim the Energy Efficient Home Improvement Credit. During the audit, the auditor takes historical data—such as utility bills, the physical features of a home, health, and safety concerns, comfort issues, and the operation of the home—and runs this information through energy modeling software to project scenarios on energy savings and return on investment.

The energy audit aims to identify which investments are worthwhile and which projects may waste money. The energy modeling software reports itemized improvements and the potential savings the retrofit yields. With the clear guidance of the report, the homeowner and energy expert can start to craft a plan to tackle the most pressing energy projects. The investment should be targeted at projects that will be genuinely beneficial. The DOE estimates homeowners can often save $8,000, including cash back on appliances, when making updates like getting an ENERGY STAR-certified heating or cooling system, or an ENERGY STAR-certified water heater.

Every American household can leverage the incentives of the Inflation Reduction Act and work with a professional energy auditor to make their homes safer, more comfortable, and energy efficient.