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How to save energy—and money—at home

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Investing in smart home technology can do more than simply make your home more sustainable—energy-efficient upgrades can also lower your electric, water and gas bills and make your home easier to sell down the road. And the signing into law of the Inflation Reduction Act in 2022 gives homeowners access to an even greater variety of financial incentives to make energy-saving improvements to their homes. Check out these nine ways to upgrade.1

  • Home energy audit

    In a home energy audit, a licensed professional conducts a room-by-room walkthrough to evaluate your home’s energy use. When it’s completed, you’ll get a report that identifies where your home is using energy inefficiently and what you can do to correct its weaknesses.

    Tax credit: A tax credit from the Inflation Reduction Act can cover 30% of the cost of the audit, up to $150.

  • New heating and cooling units

    The Energy Efficiency Home Improvement Credit offers a tax credit of 30% of qualified expenses across a variety of heating and cooling upgrades.

    Tax credit: Up to $600 per item. New central air conditioners, water heaters and hot water boilers need to meet the Consortium for Energy Efficiency (CEE) highest efficiency tier to qualify for a credit. Any electrical components needed to support them (like new panelboards) may also qualify. These certain energy property costs and energy efficient home improvements are limited to a total credit of $1,200 per year.

    Heat pumps, biomass stoves and boilers with a thermal efficiency rating of at least 75% all qualify for a credit up to $2,000 per year. Costs may include labor for installation.

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  • Smart lights and thermostats

    With app-controlled systems, you can adjust lights and set thermostats remotely, making it easy to turn off anything not in use.

    Investment: Smart lighting starter kits sell for under $100; smart thermostats can cost less than $200.

  • Leak detection sensors

    Leak detection systems send a signal when your pipes malfunction—or, in some cases, if a tap is left running. Upon noticing any irregularity, the system will shut off the water, potentially preventing a flood and saving you thousands of dollars in home repairs.

    Investment: Leak detection systems range in price from $200 to $2,000.

  • Window, door and insulation replacements

    Low-emissivity (low-e) windows capture the sun’s warmth and emit low levels of radiant thermal energy that help you heat your home—and reduce energy loss by an average of 33%, according to the U.S. Department of Energy.

    The Energy Efficient Home Improvement Credit also covers exterior door, window and skylight upgrades that meet Energy Star requirements, as well as insulation upgrades that meet International Energy Conservation Code (IECC) standards.

    Investment: Expect low-e glass windows to cost about 10-15% more.

    Tax credit: $250 per door ($500 total), Up to $600 total for all for windows and skylights. Labor costs for installation don’t qualify for these credits.

  • Residential clean energy

    You can cut your energy bills by switching from traditional sources of energy to sources like solar power—the savings could amount to as much as 50%, depending on your location and electricity rates. Installing solar panels can be pricey, though costs have dropped in recent years because of tax incentives and advances in technology.

    Water heaters are one of the top energy users in a home. Installing a solar heater can cut hot water costs in half, according to the U.S. Department of Energy. Alternately, other technologies can heat your water effectively. Recirculation systems, for instance, move hot water to fixtures quickly. That’s an important benefit, as a great deal of water used for showering is wasted as we wait for it to heat up.

    Investment: Solar panels range from $3,000 to $30,000, depending on the size of your home, and the type and model you choose. Given that price variation, it’s sensible to shop around for the best value for your needs. Solar water heater costs range from $1,000 to $5,000, depending on the size and style. You can buy a recirculation system for under $400.

    Tax credits: The Residential Clean Energy credit can cover 30% of the costs of new, qualified clean energy improvements, including solar electric panels, solar water heaters, wind turbines, geothermal heat pumps, fuel cells and battery storage technology meeting certain standards.

  • Home energy monitors

    Leaving a computer on 24/7 can cost you close to $80 a year in energy costs, while leaving a TV on half the day may cost even more. Energy monitors pinpoint how much energy you use and which devices drain the most power.

    Investment: Systems vary in price and sophistication—most cost between $150 and $400, though you can pay more than $1,000 for a top-of-the-line model. You can monitor one appliance or install a system in your main breaker to check the entire house.

  • Smart kitchen appliances

    Smart appliances can create real efficiencies. Smart refrigerators, for example, have a built-in computer that keeps track of what’s inside, helping you to avoid food waste and making your grocery runs more cost-effective. A smart dishwasher can sense how dirty your dishes are, providing a more efficient clean—and saving water and energy.

    Investment: Expect to pay upwards of $3,500 for a smart fridge and around $1,000 or so for a smart dishwasher.

  • EV charging station

    If you’re considering an electric vehicle, you’ll likely do most of your charging at home. While a regular home outlet works, a charging station is generally faster and more efficient. When you charge an electric vehicle at home, your monthly electric bill will go up by $30 to $50, but it could make your home more appealing to a new generation of eco-conscious buyers.

    Investment: In-home charging stations range from $1,000 to $4,500, depending on how your home is wired and what type of charging station you choose.

    Tax credits: A tax credit equal to 30% of the costs of qualified alternative fuel vehicle refueling property (such as EV chargers) may be available when units are placed in certain areas of the U.S.

How your home equity can help fund improvements

As you’re figuring out where to get the money to pay for energy upgrades, one option you might consider is tapping into your home equity. A HELOC is a line of credit against equity you have in your home that homeowners can borrow against to make home improvements. You can enjoy the improvements—and their cost savings—right away, and you could potentially increase your home’s value when it’s time to sell.

  1. There may be additional limitations if multiple tax credits are claimed among those discussed here.
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The material provided on this website is for informational use only and is not intended for financial or investment advice. Bank of America Corporation and/or its affiliates assume no liability for any loss or damage resulting from one’s reliance on the material provided. Please also note that such material is not updated regularly and that some of the information may not therefore be current. Consult with your own financial professional when making decisions regarding your financial or investment management. ©2024 Bank of America Corporation.

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