ENERGY EFFICIENCY

Energy Efficiency Home Improvement Tax Credit

This is a pre-existing program with advantages that have been amplified through the Inflation Reduction Act of 2022. The former version awarded a tax credit up to 10% of project and installation costs for home improvements. The current version awards 30% from 2023 through 2032. The credit allows a maximum amount to be claimed that differs across multiple categories, such as the installation of new energy-efficient windows, doors, and air conditioners. The total annual limit is $1,200 except for one category that changes that maximum to $2,000 for the purchase and installation of heat pumps, heat pump water heaters, and biomass stoves and boilers. This credit also includes home energy audits. The IRS has created an FAQ that provides further guidance about this incentive.

To Claim Credit: Fill out IRS Form 5695

Energy Efficient Commercial Buildings Property Deduction *◊

This program has existed since 2005, but new changes through the Inflation Reduction Act apply in 2023. The Section 179D deduction previously applied to commercial building owners or designers of buildings owned by federal, state, and local government entities. It has been expanded to now also include designers of commercial buildings owned by tax-exempt organizations, including schools and nonprofits. Building designers that can make a building 25% more efficient compared to reference standards produced by the American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE) will be eligible for a deduction of $.50 per square foot. Each percentage increase in efficiency above 25% comes with a $.02 increased deduction per square foot, capped at $1. If prevailing wage and labor apprenticeship requirements are followed, the deduction for 25% efficiency will be bumped up to $2.50 per square foot, with each percentage point improvement resulting in a $.10 per square foot increase up to $5 total. The revamped program also includes provisions for retrofitting commercial buildings. This deduction resets every three to four years based on the type of building and can be reclaimed in the event of future energy improvements.

To Claim Deduction: A qualified third party must test the energy expenditure of the building once renovations are finished, using IRSapproved software and procedures to measure energy performance.

Utility-Offered Programs

Some of the utility companies operating across Florida offer incentives that lead to cost savings on your bill. For instance, Florida Power & Light, which services much of the southern half of the state, offers energy-saving programs including rebates available for insulation and air conditioning upgrades when installed by a participating independent contractor.

Rural Energy for America Program Renewable Energy Systems (REAP) & Energy Efficiency Improvement Guaranteed Loans & Grants

This incentive from the U.S. Department of Agriculture is meant for agricultural producers and rural small businesses. Rural areas are defined as those with populations of 50,000 or less, and eligible business addresses can be confirmed here (parts of Sanibel, Captiva, and less populous areas in Southwest Florida may be eligible). Loans or grants cover renewable energy systems, including wind and solar, and the purchase, installation, and construction of energy-efficient property improvements. Loans are available for up to 75% of eligible project costs, while grants are available for up to 40% of total costs. The upcoming application deadline is March 31, 2023, with future dates to be announced. More information can be found here.

Solar United Neighbors Guide for Applying to the REAP Program Check Property Eligibility

Rebate Incentives

The following programs are for rebates. This means the organization or entity offering the rebate will pay a previously defined amount after the installation or purchase of the item or service that the rebate applies to, along with satisfying any additional requirements. Both the HEEHRA and HOMES Rebate programs go into effect in 2023, but the state of Florida must sign on to participate. If the state does participate, the programs would likely be administered through Florida’s Department of Energy, but it is not clear whether the rebates will be made available at the point of sale or through later reimbursement. Also, homeowners will not be able to claim both rebates for the same home upgrade.

High Efficiency Electric Home Rebate Act (HEEHRA)

The HEEHRA program covers multiple energy-efficient home upgrades including insulation and wiring and the addition of heat pump HVACs, water heaters, and dryers. The rebate will cover 100% of project and installation costs for low-income households, and 50% for moderate-income household costs. Low-income households are defined as having an income that is less than 80% of the area median income (AMI), while moderate refers to income that is 80-150% of AMI. Fannie Mae’s Area Median Income Lookup Tool can be used to check the AMI that applies to your address. The maximum rebate varies according to the type of project, and cannot exceed a total of $14,000 across all projects.

Check Property Eligibility

Home Owner Managing Energy Savings (HOMES) Rebate

This program focuses on the energy-saving performance of home energy upgrade projects. Energy savings will need to either be measured directly or modeled using software. Modeling that shows energy savings (i.e., improvements) in the range of 20-34% will be eligible for a $2,000 rebate. Modeled energy savings of 35% and above will qualify for $4,000. The improvement thresholds will be set slightly lower if measuring actual energy use improvement rather than modeling it. These rebate amounts are set to be doubled for low- and moderate-income households and can cover up to 80% of total project costs.