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Don’t leave tax incentives on the table!

November 27, 2023

The federal Inflation Reduction Act (IRA) of 2022 included new incentives for energy efficiency. Find out what financial incentives you might be eligible to receive and learn how your company can benefit from the investments in the IRA.    

Tax incentives for new construction  

Single-family home builders can earn two different tax credits for new construction: 

  • $2,500 for homes meeting or beating the Energy Star Energy Rating Index (ERI) target for their region  
  • $5,000 for a Zero-Energy-Ready home, certified by the Federal Dept. of Energy.

These requirements apply to site-built and modular single-family homes, duplexes, and townhomes. Low-rise multifamily projects permitted prior to July 1, 2021, may also be certified through this program if they meet the eligibility requirements defined in the program requirements. 

If building a multi-family structure that is not referenced above, amounts are $500 per unit (or $2,500 if the builder meets prevailing wage requirements) and $1,000 per unit ($5,000 for prevailing wage) for the Zero-Energy-Ready multi-family program.  

Tax incentives for renovations

Some renovation projects may qualify for the new construction tax credits referenced above. Local utilities administer other incentives. Common rebates include:  

  • Appliances (washers and dryers) – likely $100 or less 
  • Heat pump for space heating – up to $2,400 
  • Heat pump for water heating – up to $500  
  • Efficient gas furnace – up to $1,400 
  • Efficient gas water heater – up to $600 
  • Natural gas tankless water heater – up to $400 
  • Insulation – up to $1,200 
  • Windows – up to $200 per window  
  • Lighting – up to $10 
  • Smart thermostat – up to $75 
  • Electric panel or circuit upgrades – up to $600 
  • Electrical vehicle charger – up to $1,000  
  • Exterior doors – up to $250 
  • Energy audit – up to $150  

Please review the rebates offered at your local utility, as some rebates may differ between companies.   

Some tax incentives may be stacked and/or combined with other incentives (such as those offered by the state). Others come with income thresholds. Please consult a tax advisor to maximize your benefits. To find a professional, please check your location home building association’s member directory.  

Provide feedback

Want to have a say in how Washington structures its rebates? You can provide feedback to Washington’s Department of Commerce on the home energy rebate programs funded by the IRA. Register for a listening session on Dec. 5.  

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