UPDATE 8/16/22: The House passed H.R. 5376, the Inflation Reduction Act on 8/12/22, and President Biden signed it into law on 8/16/22.
On August 7, the Senate passed H.R. 5376, the Inflation Reduction Act of 2022 on a party-line vote. A vote in the House is expected soon. While not as ambitious as the president’s Build Back Better Act, this bill nonetheless will have an impact on homeowners in the form of the New Energy Efficient Home Credit and the Home Owner Managed Energy Savings (HOMES) Rebate Program.
The New Energy Efficient Home Credit is reactivated and extended under this bill:
- While it originally expired on December 31, 2021, it now sunsets on December 31, 2031. All homes acquired after this date are to be made retroactively eligible for this program.
- The previous credit amounts are also modified, with qualifying single-family units eligible for two different tiers of credits.
- The first tier, covering single-family homes acquired before January 1, 2025, and meet the Energy Star New Homes National Program Requirements 3.1, is eligible for a credit of $2,500.
- Single-family homes which were acquired after December 31, 2024, and meet the Energy Star New Homes National Program Requirements 3.2 are eligible for a credit of $5,000.
- Multifamily buildings are eligible for rebate tiers of $500 and $1000 per unit, with the first tier needing to meet the Energy Star Multifamily New Construction National Program Requirements, and the second needing to meet Energy Star Multifamily New Construction Regional Program Requirements.
- Both tiers require adhering to the requirements as published either on January 1, 2023, or three years prior to the date the dwelling was acquired, whichever is later.
- This program also sets a requirement that the taxpayer must ensure that the workers involved in the construction of the home are paid a prevailing wage as determined by the secretary of labor.
The U.S. Department of Energy lists online the criteria for a new home to meet the Energy Star New Homes National Program Requirements 3.1, including:
- High-performance fenestration and insulation
- Fully-aligned air barriers
- Air sealing
- Duct quality instillation
Energy Star New Homes National Program Requirements 3.2 have not yet been finalized.
The Home Owner Managing Energy Savings (HOMES) Rebate Program is created:
- The bill allocates $4.3 billion to the department of treasury to establish a new fund for state (defined to include the District of Columbia and United States Insular Areas)-led Home Owner Managing Energy Savings (HOMES) Rebate Programs. Funds will be made available until September 30, 2031.
- While the implementation of a HOMES Rebate Program is explicitly left up to state energy offices, the bill does lay out criteria for what the program would look like including specifications that home retrofits be calibrated to historical home energy use consistent with building performance institute standards. Instructions for calculating overall savings are to be determined by the secretary of treasury at a later date.
- Single-family homes which achieve energy savings of 20%-35% can receive funds equivalent to 50% of the project cost, capped at $2,000. The cap for homes that achieve 35% or more of energy savings is set at $4,000.
- Homes that achieve 15% or less in savings are eligible to receive either 50% of the project cost or a payment rate per kilowatt hour saved, equal to $2,000 for a 20% reduction in energy use (when compared to an average home in that state).
- Contractors are eligible for a $200 rebate for every home in a disadvantaged community they retrofit.
- HOME rebates may not be combined with any other federal rebate program.
While there are provisions in place for multi–family properties to fall under the coverage of the HOMES Rebate Program, it is unclear at this time if condominium and cooperative housing are considered multi–family properties as used in the legislation. CAI will continue to monitor for clarification on the definition of multi–family as used for the HOMES Rebate Program.
The HOMES Rebate Program originated in a separate bill, H.R. 3456/S. 1768, the HOPE for HOMES Act of 2021, which was introduced in the runup to President Biden’s Build Back Better Act. The HOPE for HOMES Act was folded into Build Back Better. Per a press release from one of the bill’s original sponsors, Rep. Peter Welch (D-VT), projects falling under the scope of the HOMES program include:
- Home insulation
- HVAC replacement and insulation
- Air source or ground heat source pump installation and insulation
CAI will continue to monitor this new program for further guidance on the scope of eligible projects.
CAI will closely monitor the implementation of these programs at state and federal levels, working with lawmakers and regulators as needed, and will share information with members as it becomes available.