Inflation Reduction Act

The Inflation Reduction Act, or IRA, is a federal law that was enacted on August 18, 2022. The law includes billions of dollars for tax credits, rebates and federal programs to invest in healthcare, domestic energy production and manufacturing, and climate change-mitigation, to name a few.

The IRA contains several new tax credits and rebates for 2023 to help households pay for energy efficiency upgrades, electric vehicles, electric heating and cooling systems, and certain electric appliances. If you are considering buying any of the following items or services, you may be eligible for tax credits and/or rebates that can help you pay for them:

Tax credits are available for:

New or used electric vehicle

Home weatherization upgrades (for example: improved insulation, better insulating exterior doors and windows)

Home heating and cooling systems (Heat pumps, air conditioners, water heaters)

Home energy audits

Geothermal water heaters

Residential battery storage

Rooftop solar panels

Solar water heaters

Rebates are available for some customers for:

Heat pump water heaters, electric stoves, heat pump dryers, circuit panels, insulation, air sealing, wiring

Home energy efficiency retrofits

The IRA tax credits only apply to expenditures made on January 1, 2023 and after. The rebates are not yet available. Please refer to the IRA Tax Credit FAQs and IRA Rebates FAQs, below, for more details.

IRA Tax Credits FAQs

Tax credits are available for:


New and used electric vehicles (EVs)


Energy efficiency upgrades


Electric heat pumps


Rooftop solar panels


Battery storage


Geothermal water heaters


Solar water heaters


The IRA tax credits apply to purchases made on or after January 1, 2023.

The credits differ for new and used EVs:


New EVs


Income-qualified households can receive a tax credit of up to $7,500.


The vehicle must be assembled in North America and have a battery that meets certain domestic sourcing requirements.


The vehicle must have a manufacturer’s suggested retail price (MSRP) of $80,000 or less for pickup trucks, vans, and sport utility vehicles (SUVs) and $55,000 or less for other vehicles, including sedans.


To qualify, income must be below $150,000 for single filers, $225,000 for head of household (an unmarried filer with one or more dependents), and $300,000 for joint filers.


Used EVs


Income-qualified households can receive a tax credit of up to $4,000.


The vehicle must be at least two years old and cost $25,000 or less.


To qualify, income must be below $75,000 for single filers, $112,500 for head of household (an unmarried filer with one or more dependents) and $150,000 for joint filers.

For more information on eligible EVs, you can contact the EV manufacturer, or visit the IRS’s website. For a more detailed explanation of the EV tax credits, see this explainer by Plug In America.

The “Energy-Efficient Home Improvement Credit” is a tax credit worth 30 percent of the cost of certain home-efficiency improvements and electric heating and cooling systems, including:


Adding insulation or installing efficient windows and doors,


Buying and installing any of the following heating/cooling equipment, if it meets certain efficiency requirements (described below):


Electric or gas heat pump water heaters,


Electric or gas heat pumps,


Gas Water Heaters


A natural gas, propane, or oil water heater,


A natural gas, propane, or oil furnace or hot water boiler,


Upgrading home electric wiring and panels to make it heat-pump ready, and


Home energy audits.

The credit is worth up to $1,200 each year. If you buy a heat pump or heat pump water heater, heat pumps and heat pump water heaters have a seperate maximum yearly credit of $2,000. Thus, the maximum total yearly credit may be up to $3,200.

Learn more about these tax credits.

To be eligible for the Energy-Efficiency Home Improvement Credit, exterior doors and windows, and heating/cooling equipment must meet the following efficiency standards:


Exterior doors must meet Energy Star requirements.


Exterior windows must be awarded the Energy Star Most Efficient status.


Heating/cooling equipment must meet efficiency standards set by the Consortium for Energy Efficiency (CEE). The CEE is currently revising its standards for 2023 (we will update this page as the new standards are available).


Electric Heat Pumps: Open file


Gas Water Heaters: Open file


Electric Heat Pump Water Heaters: Open file

Ask the product manufacturer and your contractor to verify whether the products qualify for the tax credit.

While the IRA tax credits apply to gas boilers and water heaters, most customers should consider buying an electric heat pump or heat pump water heater instead because of rising gas delivery rates and the price volatility of natural gas and other heating fuels.

For more information, see these two OPC reports: Gas Utility Spending Report (Oct. 2022) and Gas Rates & Climate Report (Nov. 2022).

Households will be able to receive a tax credit for 30 percent of the costs of installing rooftop solar panels, solar water heaters, geothermal heat pumps, and battery storage.

Tax credits and deductions are not the same. Generally, tax credits are more valuable because they directly reduce the amount of tax you owe, giving you a dollar-for-dollar reduction of your tax bill. A $1,000 tax credit directly lowers your tax bill by $1,000.

Deductions, on the other hand, reduce how much of your income is subject to taxes. For example, if you fall into the 22 percent tax bracket, a $1,000 deduction saves you $220 in taxes (the $1,000 of income does not get taxed at 22 percent, saving you $220).

You will receive the money from the tax credit when you file your taxes for the year in which you made the purchase. For example, if you buy a heat pump anytime in 2023 (regardless of whether the purchase occurs on January 1 or December 31), you will receive the credit off your taxes when you file your taxes for 2023 (in Spring 2024).

No. The tax credit only applies when you file your taxes for the year in which you made the purchase that qualifies for the tax credit. If you buy a heat pump on or after January 1, 2023, you will receive the credit when you file your 2023 tax return due on April 15, 2024.

No, the IRA tax credits only apply to federal taxes.

No, the tax credit can only be applied to taxes you owe, so any excess value is lost.

IRA Rebates FAQs

The IRA includes two rebate programs: (1) the High Efficiency-Electric Home Rebate (HEEHR) Program, and (2) the HOMES Rebate Program. You cannot combine the HEEHR and HOMES rebates. The rebate programs are not currently available. The U.S. Department of Energy (DOE) and the Maryland Energy Administration (MEA) will develop the rules for implementation.

MEA has launched an informational webpage as well as set up an email address for all public questions:



The DOE and MEA have not released definitive information on when the rebates will be available. We will update this page when information is available on the timing of the rebates.

The HEEHR program will provide rebates for the purchase and installation of certain electric appliances and equipment to households.

Not everyone. The HEEHR rebates are available to those with a total annual income less than 150 percent of the area median income.

The area median income is determined by the United States Department of Housing and Urban Development (HUD). HUD determines area median income by grouping one or more counties and calculating the median income of the grouped area. For example, to determine area median income, HUD groups the following counties into one area: Anne Arundel County, Baltimore City, Baltimore County, Carroll County, Harford County, Howard County, and Queen Anne’s County. In 2022, the yearly median income for this area was $116,100, so if you lived in any of these counties, you would have to make less than 150 percent of $116,100 (less than $174,150) to qualify.

The items covered by the program and their maximum rebate values are:


$8,000 for an electric heat pump HVAC system,


$4,000 for an electric panel upgrade,


$2,500 for electric wiring,


$1,750 for an electric heat pump water heater,


$1,600 for insulation,


$840 for an electric stove, and


$840 for an electric heat pump clothes dryer.

The total combined rebate cannot exceed $14,000 per household.

The HOMES Rebate Program will provide rebates for whole-home energy-efficiency improvements. The rebate values increase for low- and moderate-income households, but all households, regardless of income level, will have access to the rebates. The rebate will have a maximum value of $2000 to $8000 depending on income level and the amount of energy savings. More specifics will become available when the MEA implements the HOMES program.

MEA has not released any information on whether the rebates will be available for purchases that occur prior to the start of the rebate programs. Any project completed prior to the MEA announcing program requirements could be ineligible for a rebate.