Inflation Reduction Act Frequently Asked Questions

In part, the Inflation Reduction Act provides tax credits and rebates for a number of home improvements to help homeowners, owners of low-income renter-occupied buildings, and, in certain cases, renters, make their homes more energy efficient.

These rebates can help you make purchases for products and home improvements that lower your energy bills.

Texas intends to apply for the Home Energy Rebates programs. The programs consist of the Home Efficiency Rebate (HOMES) program and the Home Electrification and Application Rebate (HEAR) program.

The Home Energy Rebates programs will give money back, through rebates, on household upgrade purchases that can lower monthly utility bills. Depending on where you live, you can use the rebates to get discounts on ENERGY STAR® appliances, insulation and much more.

In total, Texas will receive $690 million in federal funding for the Home Energy Rebates programs to support rebates in the following amounts:

• HOMES program allocation: $346,022,980
• HEAR program allocation: $344,006,590

• Under the HOMES program, certain homeowners and owners of enter-occupied buildings who meet federal and state requirements are eligible to apply for rebates for qualifying purchases.
• Under the HEAR program, the rebates are available to:
  1. low- to moderate-income (LMI) households
  2. owners of multifamily units with greater or equal to 50 percent LMI occupants, and
  3. any “government, commercial, or nonprofit entity” carrying out a qualified electrification project on behalf of 1 or 2.

We anticipate opening the HOMES and HEAR programs in Summer 2025.

We are actively working to prepare applications in advance of key federal deadlines and state timelines to meet a Summer 2025 opening date.

January 31, 2025: Deadline for states to submit applications for HOMES/HEAR program funds.

Key State Timeline

• Spring/Summer 2024: Anticipated release of request for proposals for program administrator.

Texas intends to contract with a single program administrator to administer both the HOMES and HEAR programs simultaneously.

Rebate amounts will be determined based on energy savings calculated using either modeled or measured savings methods. Efficiency upgrades should achieve at least 20 percent of the home’s energy use for modeled energy savings and 15 percent for measured energy savings.

Under a Modeled Savings Pathway

• For energy savings between 20 percent to 34 percent:
  • Low-income households will receive $4,000 (up to 80 percent of the project cost).
  • All other households will receive $2,000 (up to 50 percent of the project cost) and up to $200,000 per multifamily building.
• For energy savings 35 percent or greater:
  • Low-income household will receive $8,000 (up to 80 percent of the project cost).
  • All other households will receive $4,000 (up to 50 percent of the project cost) and up to $200,000 per multifamily building.

Under a Measured Savings Pathway

• For energy savings 15 percent or greater:
  • Low-income household will receive an amount per kWh-equivalent based on $4,000 for 20 percent energy savings.**
  • All other households will receive an amount per kWh-equivalent based on $2,000 for 20 percent energy savings.**

Notes

• Contractors or aggregators qualify for a $200 incentive for projects completed in disadvantaged communities.
• *Under 80 percent of Area Median Income. Multifamily buildings qualify if at least 50 percent of the units are low-income.
• **Rebate is the measured kWh-equivalent savings for the home times a rate that would yield $2,000 or $4,000 for 20 percent energy savings in the average single-family or multifamily home in the state.

The rebate amounts are set by the IRA and are specifically targeted to low-income households.

A household’s income eligibility will determine the percentage of the costs covered.

• Low-income households with greater than 80 percent Area Median Income (AMI) will receive 100 percent of the costs covered.
• Moderate-income households with 80 percent-150 percent AMI will receive 50 percent of the costs covered.

Overall Incentives

• Max consumer rebate. $14,000
• Max contractor rebate. $500

Rebates for qualified electrification projects (appliances shall be ENERGY STAR® certified.)

• ENERGY STAR® certified products
• Heat pump HVAC, $8,000
• Heat pump water heater, $1,750
• Electric stove/cooktop, $840
• Heat pump clothes dryer, $840
• Breaker panel box replacement, $4,000
• Electric wiring, $2,500
• Weatherization, $1,800

Texas is unable to accept receipts for home energy rebate reimbursement at this time because we are still actively working to apply for funds from the federal government and taking steps to implement the program once applications have been submitted and approved.

We anticipate opening applications in Summer 2025.

Although federal law allows for retroactive reimbursement for projects initiated on or after August 16, 2022, the project must fulfill all federal and state requirements.

It will be difficult for projects initiated before the state program launches to comply with state requirements, so retroactive reimbursement for projects completed before the Texas HOMES and HEAR program launches is highly unlikely.

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