
There are several tax credits and rebates available to qualifying North Carolinians who are looking to lower their energy costs. (Photo by PATRICK T. FALLON/AFP via Getty Images)
There are several tax credits and rebates available to qualifying North Carolinians who are looking to lower their energy costs.
As the new year approaches, so does tax season — but did you know there are several tax credits and rebates available, with more soon to be available, that could help save you money on energy costs?
Many of these credits and rebates are part of the Inflation Reduction Act (IRA), a 2022 law that established a mix of tax credits for companies and rebates for consumers in order to make the manufacturing and consumption of clean energy technologies and products cheaper.
Let’s explore the rebates available to North Carolinians:
Energy Efficient Home Improvement Tax Credit
According to the US Department of Energy, the average American spends $2,000 on energy bills each year, without even factoring in the money that might be “going to waste” from drafts, air leaks, and more.
But now, the Energy Efficient Home Improvement Tax Credit can help offset the cost of certain home improvements projects, such as installing energy-efficient insulation, windows, doors, and electric heat pumps. It may even lower future heating bills, according to experts. This tax credit can also reduce homes’ greenhouse gas emissions.
Qualifying for this tax credit, however, depends on how many and which kind of projects homeowners undertake. Certain upgrades carry caps on how much you can claim in credits. Homeowners can get up to $500 a year in tax credits for installing efficient exterior doors, for example. They can also get up to $600 for exterior windows and skylights, as well as $1,200 for insulation and air-sealing materials or systems. It’s worth noting that the combined tax break for these projects is capped at $1,200 a year.
Other projects, such as installing electric or natural gas heat pump water heaters, or electric or natural gas heat pumps, carry a separate, $2,000 annual cap.
In total, taxpayers can get a maximum overall credit of $3,200 per year, if they combine projects worth up to $1,200 and $2,000.
North Carolinians can check out this fact sheet, published by the IRS, for specific examples of overall tax breaks consumers can expect depending on which projects they plan to carry out.
Homeowners can claim the maximum annual credit each year that they make eligible improvements through 2032. There is no lifetime dollar limit.
In order to qualify for the Energy Efficient Home Improvement Tax Credit, installations must meet certain efficiency standards, which are outlined here by the IRS. Taxpayers can claim this tax credit when they file their annual tax returns. Since the credit is nonrefundable, households must have a tax liability to benefit, and the IRS won’t issue a refund for any tax credit that exceeds one’s tax liability.
Rooftop solar
For those interested in generating their own clean energy, installing rooftop solar panels might be a way to go.
A tax credit is available through the IRA that covers up to 30% of the cost of installing the solar panels, with no cap. The IRA also offers a 30% tax credit for homeowners that need to upgrade their entire electricity panel to install rooftop solar, as well as 30% for installing battery storage.
According to Rewiring America, the average six kilowatt solar installation costs about $19,000, so the average solar tax credit is about $5,700.
You can qualify for this tax credit if your solar energy system was installed after Jan. 1, 2017 or if your solar energy system is located at a residence of yours in the US. You can also qualify if you own the solar energy system, meaning you purchased it through financing or with cash, “but you are neither leasing the system nor paying a solar company to purchase the electricity generated by the system.”
You might also be eligible if you purchased an interest in an off-site community solar project, as long as the electricity generated is credited against, and does not exceed, your home’s electricity consumption. For more information on this stipulation, click here.
Finally, you might also be eligible if your solar energy system is new or being used for the first time, as the credit can only be claimed on the “original installation” of the equipment.
The Department of Energy recommends seeking professional tax advice to see if you qualify for this tax credit. If you do, you can then fill out and attach this form to your federal tax return.
Earlier this year, the Environmental Protection Agency (EPA) also awarded EnergizeNC a $156 million grant to help low-income and disadvantaged households across the state “utilize the benefits of low-cost, reliable solar energy.”
The state is still in the middle of a one-year planning period to determine the best way to go about implementing the program.
Electric vehicles
If you’re looking to cut your car emissions, you may want to consider buying an electric car.
A federal electric vehicle tax credit offers consumers up to $7,500 off the purchase of an electric vehicle, depending on the make and model of the car at point-of-sale. In order to qualify for this tax credit, single filers must make less than $150,000 annually; for joint filers, the household’s income must be less than $300,000 per year.
There are limitations to this tax credit, however. Only electric vehicles assembled in North America qualify, and cars that cost more than $55,000 aren’t eligible. Trucks and vans that cost more than $80,000 are also not eligible.
For a used electric vehicle, you can get up to $4,000 off the purchase price.
State-level savings
North Carolina’s government also has several ways that homeowners can save money by making their property more energy-efficient.
North Carolina exempts 80% of the appraised value of a solar energy system from property tax. To qualify, a household’s solar energy system must not be used to generate income or be in connection with a business that may be entirely exempt from property taxes.
The state’s Weatherization Assistance Program also helps low-income North Carolinians “save energy, reduce their utility bills, and stay safe in their homes” by awarding grants to residents in need. Millions of dollars have so far been awarded and have been used to repair or replace heating, ventilation, and air conditioning (HVAC) units in homes across the state.
Coming in 2025
The state is also working to implement the NC Home Energy Rebate Program and is hoping to launch it in early 2025.
Officials are using over $209 million provided by the Inflation Reduction Act to create the Homeowners Managing Efficiency Rebates (HOMES) and Home Electrification and Appliance Rebates (HEAR) programs, which offer rebates for consumers to buy and install electric appliances and make energy-efficiency upgrades to homes and multifamily buildings.
The HOMES program will cover up to 80% of the cost of whole-home energy efficiency projects such as heat pump installations and sealing and insulation efforts. The HEAR program will provide point-of-sale rebates that cover up to 100% of the cost of energy efficient home appliances, such as electric stovetops, heat pumps, and electric clothes dryers.
Once the programs are in effect, the state will provide rebates for eligible energy savings retrofits that began on or after Aug. 16, 2022.
North Carolinians will be eligible for these rebates depending on their annual income and household size. If a resident is enrolled in certain existing federal assistance programs, such as the Low-Income Energy Assistance Program (LIEAP) or Medicaid, they may be eligible for the Home Energy Rebate Program without providing additional income information.
North Carolina households with incomes below 80% of the Area Median Income (AMI) may get 100% of the project costs covered up to a certain amount; the ultimate level of the cap will depend on a number of factors including the total project cost, whether or not the project has estimated energy savings, how those energy savings are calculated, and what rebate limits the program administrators decided to implement.
If a household’s income is between 80% and 150% of the AMI, it may be eligible to have up to 50% of the project costs covered by the rebate up to a certain amount. If a household’s income is more than 150% of the AMI, it isn’t eligible for the rebate.
Statewide in North Carolina, the AMI is $88,600 per year, although it varies widely from one area to another. North Carolinians can find their AMI using this tool.
Other options
There are several other tax credits and rebates available through the Inflation Reduction Act that can help you save money.
For example, in rural areas, an electric vehicle charging station can be installed on your property. Using the 30C Alternative Fuel Infrastructure Tax Credit, you can get $1,000 off installation costs. There’s also a rebate program you can take advantage of to get up to $840 off electric/ induction stove and heat pump clothes dryer installation.
For a full list of available credits and rebate programs, click here.

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