It’s that time of the year again when the heat in central Florida will have homeowners running for cover in the nearest air-conditioned building. The sweltering heat and sporadic showers make summers in central Florida unbearable without AC. With the prices of everything skyrocketing due to inflation, it shouldn’t be a surprise that energy bills are also increasing. The inflation reduction act was recently passed to help homeowners nationwide overcome some financial difficulties associated with inflation. But what exactly is it, and how does it affect Central Florida homeowners?
What Exactly is the Inflation Reduction Act?
The Inflation Reduction Act is a way for the government to encourage consumers to help with climate change by going green and switching to things like electric cars, energy-efficient appliances, or solar in exchange for tax credits. For most products, such as cars, consumers can get the credits applied to the product upfront. However, homeowners will have to file their taxes to benefit from the tax credit with items such as solar. But since everyone’s tax situation is unique, it is ideal to consult a local tax professional before purchasing one of these green tools.
What Ways Will It Affect Central Florida Homeowners?
Ultimately, it will depend on what types of changes Central Floridian homeowners decide to make to their homes or personal effects as how much this act will affect them. Each tool is associated with a different savings credit. Here’s what Central Florida residents can expect.
Electric Vehicles
If you live in central Florida and want to take advantage of the credits associated with this act, one way to do it is by purchasing an electric vehicle. The average cost of a new electric car is about $60,000. However, due to the recently passed act, consumers can get a price reduction of about $7500 with a tax credit. For used electric vehicles, expect a tax credit of about $4000.
Appliances and Other Energy Efficient Upgrades
In addition to saving on electric vehicles, Central Florida residents can take advantage of the tax by switching to energy-efficient appliances. These would include appliances with the energy star label on them. Additionally, upgrading to energy-efficient doors and windows will also qualify. For such upgrades, homeowners can expect up to $4000 in rebates.
Electric Heat Pumps
Another way to save is by installing electric pumps to heat water or heating and air. The act will provide a tax credit of $1800 per year.
Solar Systems
Another way homeowners can make their houses more energy efficient and quality for the tax credit is by installing a solar system. The Solar Investment Tax Credit (SITC) allows homeowners to switch to solar energy and provides a tax credit of 30 percent. Homeowners can take advantage of this tax credit from now until 2032. In 2033 it will decrease to 26 percent, and by 2034 it will drop to 22 percent. The credit is set to expire by 2035 unless the federal government renews it.
Since this is a national tax credit, Central Floridians can take advantage of it. However, there are also local benefits that homeowners and Central Florida can take advantage of to help cut costs on solar energy. For instance, homeowners can get net metering which allows them to get credit on their utility bills for the excess power their solar system provides to the grid. Additionally, there are Florida’s Property Tax Exclusion for Residential Renewable Energy Property and the Solar and CHP Sales Tax Exemption. The former allows a property tax exemption after installing your solar system, and the latter will enable you to pay for the solar equipment without being charged the usual 6 percent sales tax.