The government will pay you up to $1,700 to upgrade your water heater — but this deal won’t last forever

The Inflation Reduction Act is a historic measure to combat rising global tariffs, but this legislation is not only good for the environment, it's also good for your bank account.

Thanks to the IRA, Americans can benefit from tax credits and rebates when making environmentally friendly improvements to their homes — and save up to $1,700 on certain improvements.

The shovel

To reduce the use of dirty energy in the United States, Congress passed the Inflation Reduction Act, which provides incentives for homeowners to switch to clean energy. Under the IRA, homeowners can get money back when they make green upgrades to their home.

Upgrading your water heater is one of those green changes you can make that will save you money thanks to the IRA. According to the Department of Energy, the IRA will cover up to 30% of the project cost — up to $2,000 in tax credits for tax year 2024.

In certain states and at certain household income levels, homeowners may also be eligible for rebates of up to $1,750 if they replace their water heater with a high-efficiency heat pump water heater.

How it works

The Inflation Reduction Act helps homeowners across the United States make environmentally friendly improvements to their homes, which not only saves them money in the long run but also reduces pollution from their homes.

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By switching to eco-friendly appliances like heat pump water heaters, you can significantly reduce your home's environmental impact. According to a report from the NRDC, electrifying your home and replacing your gas-fired furnace with an electric heat pump can reduce a household's climate-changing pollution by 45-72%.

If you're interested in making your home more environmentally friendly, consider contacting organizations that can help you make the switch, such as Arcadia and WattBuy. Homeowners can also use Rewiring America's free online tool to identify available tax incentives and get cost estimates for rewiring their homes.

What our users say

Industry experts encourage homeowners to take advantage of tax credits and rebates when making environmentally friendly upgrades to their homes.

“Essentially, the IRA creates an $8,000 bank account for every American household … if people figure out how to access it and use it,” environmental journalist Bill McKibben said during a press conference.

McKibben also explained the benefits of switching to certain environmentally friendly appliances.

“The good news is that these technologies are better than the ones they replace. Your magnetic induction cooktop is better than the gas flame you cook on, cheaper and won't give your kids asthma,” McKibben said. “The heat pump is an elegant replacement for the furnace and cheaper to run in the long run.”

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