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Looking to cut your taxes next year? Here's how the Inflation Reduction Act could help.

ByJan Wesner ChildsApril 11, 2023
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Tim McKibben, left, a senior installer for the solar company, Sunrun, and installer Aaron Newsom install solar panels on the roof of a home in Granada Hills, California, in this undated photo.

(Mel Melcon / Los Angeles Times via Getty Images)

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W​ith the April 18 tax deadline looming, many people may be wondering how to lower their income taxes next year.

The Inflation Reduction Act is one potential way to do that, while at the same time helping protect the planet against climate change.

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The act includes tax credits for energy efficient home improvements and projects that can go a long way toward saving money and potentially cutting greenhouse gas emissions.

H​ere's a look, based on information from the Internal Revenue Service:

Home improvements that help conserve energy are eligible for tax credits totaling up to $3,200 a year, subject to certain qualifications like being Energy Star certified.

New windows, doors or skylights are worth up to $500 in credits.

New insulation is worth up to 30% of its cost in tax credits.

Home energy audits, sometimes called home energy assessments, qualify for up to $150 in tax credits.

Air conditioners, gas furnaces and gas hot water heaters rate a tax credit of up to $600.

Heat pump or heat pump water heaters get up to $2,000 in credits.

E​lectric panel upgrades could be worth a credit up to $600.

The residential clean energy credit provides a tax credit up to 30% for qualifying projects such as solar electric panels, solar water heaters, wind turbines, geothermal heat pumps, fuel cells and battery storage technology.

Electric or fuel cell vehicles saw some changes to their credits in the act. As of 2023, they qualify for up to $7,500 in credits, provided certain criteria are met.

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The Weather Company’s primary journalistic mission is to report on breaking weather news, the environment and the importance of science to our lives. This story does not necessarily represent the position of our parent company, IBM.

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