The State of U.S. Clean Energy Funding: January 2025 Report (Updated February 10, 2025)

The State of U.S. Clean Energy Funding: 2025 Report (Updated August 5, 2025)

About This Page

This page consolidates updates on federal clean energy policies, particularly as they relate to home energy rebates and incentives. With shifting priorities under the Trump administration, it’s essential to track how funding for home energy improvements—originally supported by the Inflation Reduction Act (IRA)—is being modified or paused. This page is updated monthly to provide the latest developments, legal actions, and industry responses.

The Inflation Reduction Act (IRA) was a landmark bill aimed at accelerating the adoption of clean energy in American homes. It provided funding for various homeowner incentives, including HVAC rebates for energy-efficient heating and cooling systems, solar rebates and incentives to support residential solar adoption, and broader home energy efficiency incentives under the IRA framework. However, recent executive actions have created uncertainty about the future of these programs.

Actionable Summary: Key Changes and What Homeowners Should Do

Recent developments in insurance, taxes, and incentives are impacting homeowners across the U.S. Below is a quick overview of the major changes at the federal and state level, and steps homeowners can take in response. The detailed analysis with supporting references follows.

Homeowners Insurance Costs and Availability

Climate Impact and Rising Premiums

In the past few years, the frequency of costly natural disasters has driven up homeowners insurance costs nationwide. In 2024 alone, the United States experienced 27 separate weather events causing over $1 billion in damages each [NOAA data via NCSL]. The increasing toll of hurricanes, wildfires, severe storms, and other disasters means insurers are paying out more in claims, and thus charging higher premiums to homeowners. According to a comprehensive report by the U.S. Treasury’s Federal Insurance Office, average homeowners insurance premiums rose about 8.7% faster than inflation from 2018 to 2022 nationwide [Treasury FIO Report, Jan 2025]. In disaster-prone regions, the effect is even more pronounced: homeowners in the most climate risk-exposed areas pay on average 82% higher premiums than those in the lowest-risk areas, and they also face significantly higher policy non-renewal rates from insurers [Treasury FIO Report, 2025]. In short, many insurers have become wary of covering homes in high-risk coastal or wildfire zones without charging substantially more, or they have pulled out of those markets entirely.

The insurance availability crisis became evident as several major insurers restricted new policies or exited states like California and Florida in recent years due to wildfire and hurricane losses. Companies have canceled or declined to renew policies in certain high-risk areas, leaving homeowners scrambling for coverage [NCSL, 2025]. This has pushed more homeowners into state-run “insurers of last resort” or smaller regional companies. As costs rise and options shrink, homeowners are feeling the squeeze – either paying much more for coverage or, worse, going uninsured on their property if they cannot find or afford a policy.

What should homeowners do? First, it’s critical to maintain some level of coverage – going without insurance could be financially devastating after a disaster. If your insurer hikes your premium drastically or exits your area, shop around with other private insurers, including surplus-lines carriers if necessary. Check if your state has a FAIR Plan or similar backup insurance program and understand its coverage limits (these plans can provide basic fire/wind coverage when private companies won’t). To combat rising costs, look for all available discounts: many insurers offer credits for installing storm shutters, fortified roofing, fire-resistant landscaping, security systems, and other loss-mitigation measures. Investing in these upgrades can both protect your home and potentially lower your premium. Document any such improvements and ask your insurer about mitigation credits. It’s also wise to raise your deductible if you are financially able – higher deductibles mean lower premiums (just be sure you can cover that out-of-pocket if a loss occurs).

State Reforms to Stabilize Insurance Markets

Homeowners are not alone in facing this crisis – state governments have been actively intervening with legislative reforms and programs. In the 2023–2025 legislative sessions, at least 26 states enacted new laws addressing homeowners insurance issues [NCSL Insurance Legislation Summary, 2025]. Many of these laws aim to make insurance more accessible and affordable in disaster-prone areas, and to strengthen consumer protections. For example, Florida undertook sweeping reforms after a series of insurer insolvencies and skyrocketing premiums. In late 2022, Florida’s legislature held special sessions to curb abusive litigation and fraud that were driving up costs – they eliminated one-way attorney fee awards (which had allowed policyholders to automatically recover legal fees if they won in court) and banned Assignment of Benefits (AOB) contracts in property insurance claims (which contractors often used to take over claims, sometimes leading to inflated lawsuits) [Florida SB 2A, 2022 Summary]. These changes remove incentives for the large volume of lawsuits that plagued Florida’s market. Florida also bolstered its insurer of last resort (Citizens Property Insurance) depopulation efforts – now, a Citizens policyholder must accept any private insurance offer that costs no more than 20% above the Citizens premium, to encourage a return to the private market [Florida SB 2A, Citizens provision]. Thanks to **five major insurance reform laws** since 2019, Florida officials report signs of stabilization: 11 new insurance companies have entered the Florida market in the past two years, and the average homeowners premium increase in Florida was only about 1% in 2024 (the lowest in the nation, whereas some states saw 20%+ increases) [FL Governor Press Release, Feb 2025]. In fact, several insurers in Florida have even filed for rate decreases for 2024–2025, and the state-run Citizens Insurance is now implementing rate cuts (averaging –5.6% statewide) for the first time in years as its policy count begins to shrink [FL Governor Press Release, 2025]. This illustrates that aggressive state intervention can help turn the tide, though Florida’s insurance rates remain among the highest in the country.

Other states have taken different approaches. California, dealing with insurers refusing to cover wildfire-prone homes, introduced a new regulatory framework in 2023–2025. California’s Insurance Commissioner pushed through regulations allowing insurers to incorporate forward-looking wildfire catastrophe models (and the rising reinsurance costs) when setting rates – but in return, insurers are now **required to expand coverage in high-risk areas** if they want those higher rates. In a landmark move, California will mandate that insurers who use the new risk models must offer policies to more homes in wildfire zones, including many households that were previously non-renewed or only eligible for the bare-bones state FAIR Plan [CA Dept. of Insurance Press Release, Jul 2025]. Additionally, the new rules compel insurers to recognize homeowners’ wildfire mitigation efforts – things like clearing defensible space, installing fire-resistant roofs, etc., must be factored in to earn discounts on premiums [CA DOI Press Release, 2025]. California’s approach aims to strike a balance: let insurers charge adequate rates for the growing wildfire risk, but ensure they don’t just cherry-pick low-risk customers and abandon the rest of the market.

Many states are also creating incentive programs to shore up insurance availability. Louisiana, for instance, revived its post-Hurricane Katrina strategy of offering grants to attract insurers back to the state. In 2023, Louisiana funded a $45 million “Insure Louisiana Incentive Program” which gives matching grants to insurers that commit to write new policies in the state. This program lured multiple regional insurers to take on business; by mid-2023, participating companies had written over 17,000 new homeowners policies (and even assumed blocks of policies from Louisiana’s oversubscribed Citizens Insurance) as a result of the grants [PropertyCasualty360, Jul 2023]. Similarly, **mitigation grant programs** are a popular tool: Florida’s My Safe Florida Home program (which offers grants for hurricane-proofing homes) was expanded in 2023 to cover more homeowners and condominiums, and states like South Carolina and Alabama have their own wind resistance retrofit grant programs. Some states (e.g. **Arkansas** and **Georgia**) have even set up tax-advantaged catastrophe savings accounts for homeowners to save money for disaster expenses tax-free [NCSL Summary, 2025]. On the consumer protection front, new laws are ensuring transparency and fairness: **Arkansas** now requires that all policy deductible amounts be clearly shown on the policy’s declarations page so homeowners aren’t caught off-guard by large deductibles [NCSL Arkansas, 2025]. **Connecticut** passed a law mandating that mortgage applicants be notified in writing that standard homeowners insurance *does not* cover flood damage (addressing a common misconception) [NCSL Connecticut, 2025]. **Montana** now allows insurers to give premium discounts or benefits to policyholders who undertake wildfire or wind mitigation on their property (incentivizing risk reduction) [NCSL Montana, 2025]. And in **Virginia**, lawmakers prohibited the transfer of insurance claim benefits to third parties without the insurer’s consent – effectively banning assignment-of-benefits in property insurance, similar to Florida’s move [NCSL Virginia, 2025]. These are just a few examples of the flurry of state-level actions taken to steady the home insurance market.

What should homeowners do? It’s encouraging that state policymakers are tackling the insurance problem, but homeowners should take an active role as well. Stay informed about new laws or programs in your state: for instance, if your state offers grants or rebates for strengthening your home (wind mitigation, wildfire defensible space, seismic retrofits, etc.), take advantage of them – not only could this lower your own risk and insurance premium, but some states now require insurers to give you discounts for it. Be aware of consumer protection changes: if your state now mandates clearer disclosure of policy terms or gives you new rights (such as extended notice before cancellation, as **Louisiana** did by lengthening the non-renewal notice period), make sure your insurer is adhering to those rules. If insurers are required to offer discounts for certain upgrades or to notify you of options, hold them to it. Also, if your state’s legislature has recently passed reforms, keep an eye on your renewal offers – you may start seeing rate changes (hopefully moderating) or new insurers entering your market. It’s a good idea to periodically get quotes from a few insurers, especially if the market is shifting due to legislative changes. And if you live in a state like Florida or Louisiana with a state-backed insurance entity (Citizens or similar), find out the criteria that would force you to move to a private insurer (like Florida’s 20% rule) so you aren’t caught by surprise.

Flood Insurance Overhaul (Risk Rating 2.0)

Separate from standard homeowners insurance, flood insurance has seen a major shake-up at the federal level. Most Americans who carry flood coverage get it from FEMA’s National Flood Insurance Program (NFIP). In recent decades, NFIP premiums were often subsidized or kept artificially low relative to actual risk, especially for older homes in flood zones. In an effort to put NFIP on more solid financial footing and charge risk-based rates, FEMA implemented a new pricing system called Risk Rating 2.0. As of April 1, 2023, Risk Rating 2.0 is fully in effect for all NFIP policies – it’s the biggest change to flood insurance pricing in half a century. Rather than using only simplistic flood zone maps and home elevation to set prices, the new system evaluates each property’s individual flood risk (considering factors like distance to water, elevation, rainfall, and rebuilding cost) and adjusts premiums accordingly [GAO Report on Risk Rating 2.0]. In theory, this means higher-risk homes pay more and lower-risk homes pay less, aligning premiums with actual risk. In practice, however, it has led to **steep premium increases** for many homeowners in coastal and flood-prone areas.

According to data from FEMA and testimony by U.S. Senators, about 77% of NFIP policyholders are seeing increases under Risk Rating 2.0 compared to the old rates [Sen. Cassidy Press Release, June 2025]. FEMA caps annual NFIP rate increases at 18% per year for primary homes, but those hikes will continue each year until the full risk-based rate is reached – which for some homes could be several times their old premium. In states like Louisiana, Florida, Texas, New Jersey, and others with large numbers of NFIP policies, homeowners are reporting dramatic rate jump scenarios. For example, in **Louisiana**, the average NFIP premium has roughly **tripled** (a 234% increase) in just one year, 2023, forcing over 50,000 Louisianans to drop their coverage because they could not afford it [Cassidy et al., 2025 Letter]. In Mississippi and Alabama, FEMA’s data indicated that once fully implemented, the new rates would be over **100% higher** (i.e. double) on average than previous levels [Cassidy Press Release]. Even in inland states and less populous states, the majority of policyholders are seeing increases (e.g. 83% of West Virginia NFIP policies face increases, with an average 176% rise expected when at full risk rate) [Cassidy Press Release]. These numbers underscore how underpriced many policies were relative to risk – but they also raise serious concerns about affordability. In some communities, especially coastal parishes and counties, the new NFIP premiums exceed 2% of area median income, a level FEMA itself considers “cost-burdened” for insurance. Officials worry that pricing people out of flood insurance will leave more homeowners uninsured, which could be disastrous for recovery when floods inevitably happen.

The changes have sparked a political backlash in Congress and from state officials. Several Gulf Coast and Atlantic Coast states have sued or lobbied FEMA to delay Risk Rating 2.0, and a bipartisan group in Congress is pushing legislation to cap annual increases or provide means-tested subsidies. As of mid-2025, however, Risk Rating 2.0 remains in effect. FEMA defends the program as necessary to reflect true risk and to encourage mitigation, noting that some properties *have* seen decreases (particularly lower-value homes at the fringe of flood zones). They also point out that the NFIP was billions in debt due to catastrophic losses (e.g. Hurricanes Katrina, Sandy, Harvey) and charging actuarially sound rates is important for the program’s solvency.

What should homeowners do? If you’re in a flood-prone area, you should approach this on two fronts: managing your insurance and reducing your flood risk. First, talk to a knowledgeable insurance agent or broker about your options. In many cases, private flood insurance companies now offer alternatives to NFIP policies. These private insurers may use different models and sometimes can offer a better rate, especially for homes that are at lower risk than FEMA’s broad metrics might indicate. Get quotes from private flood insurers – just ensure the coverage limits and terms are comparable to NFIP (and if you have a mortgage, that the private policy meets your lender’s requirements). Some homeowners are finding savings by switching to private policies, though others in very high-risk areas might find private market is even more expensive or unavailable. Second, if your NFIP premium is increasing, see if you qualify for any community-wide discounts: many communities participate in FEMA’s Community Rating System (CRS), which gives NFIP premium discounts (5% to 30% off) if the town/county has taken flood mitigation measures. Check with your local floodplain manager or insurance agent if your community has a CRS discount and make sure it’s applied.

Most importantly, consider investing in flood mitigation for your home. Risk Rating 2.0 takes into account things like the elevation of your lowest floor, whether you have flood openings (vents) in your foundation, the height of machinery (HVAC, water heater) above potential flood levels, etc. Even relatively modest projects – for example, installing proper flood vents, elevating an A/C condenser onto a platform, or rebuilding a short perimeter wall to keep out minor flooding – could improve your risk profile and potentially reduce your premium. Larger undertakings like elevating the entire structure on pilings are expensive but dramatically lower risk (and insurance costs) if feasible. Keep receipts and documentation of any mitigation work. You may need to get an updated elevation certificate or documentation to show the insurer/FEMA the improvements. Additionally, check if there are any grant programs in your state for flood mitigation (some states or FEMA’s Hazard Mitigation Grant Program offer funding to elevate homes or make other flood improvements – these can be competitive, but worth exploring). While the upfront cost can be high, the long-term savings in insurance and avoided damage could make it worthwhile, and there are tax credits in some areas for resilience improvements.

Finally, do not simply drop your flood insurance because it got more expensive. This is a risky gamble – remember that homeowner’s insurance never covers flood damage, so without a flood policy, you could be left with no financial help to rebuild if a flood hits (federal disaster aid is not a guarantee and is usually far less than insurance would pay). If the cost is truly unaffordable, speak with your insurance agent about possibly lowering the coverage amount (insuring just the mortgage balance, for example, instead of full replacement cost) or opting for a higher deductible to reduce premiums. Also, voice your concerns to local and federal representatives – there are ongoing debates about affordability provisions, and input from affected homeowners can influence future relief measures or adjustments to the program.

Tax Relief Changes for Homeowners

Higher Federal Deduction Limits (SALT Cap Increase)

Homeowners received some good news on the tax front. In July 2025, Congress passed the One Big Beautiful Bill Act (OBBBA), a broad tax package that, among other things, permanently raised the cap on the federal State and Local Tax (SALT) deduction. Since 2018, taxpayers have been limited to deducting a maximum of $10,000 of their combined state/local taxes (property taxes, plus state income or sales taxes) on their federal return – a cap that especially hit homeowners in high property tax states and areas. The new law increases that cap to $40,000 per year (for those below certain income levels) [Thomson Reuters, July 2025]. Specifically, the full $40k deduction is available up to a Modified AGI of $250k (single) or $500k (married filing jointly). Above those thresholds, the SALT deduction starts to phase out at a 30% rate – so very high-income taxpayers will see the usable cap gradually drop back toward $10k, with top earners still effectively capped around the old $10k level [Thomson Reuters / Congress.gov]. But for the vast majority of middle and upper-middle income homeowners, this change means you can deduct up to four times more of your property and state taxes than before. This provision is now permanent (the prior $10k cap was due to expire after 2025, but its future was unclear). Lawmakers from high-tax states like New York, New Jersey, California had pushed hard for this relief, and its enactment should increase the federal tax refund or reduce the taxable income for many homeowners starting with the 2025 tax year.

As a quick example, if you pay $8,000 in property tax and $6,000 in state income tax ($14,000 total), under the old law you could only write off $10k of that. Under the new SALT cap, you could deduct the full $14k – potentially saving around $1,000 more in federal tax (if you’re in roughly the 22% bracket). The larger benefit would accrue to those with even higher tax bills (up to the $40k cap). Note, however, that if you take the standard deduction, none of this matters – you only benefit if you itemize deductions on Schedule A. With the standard deduction being quite high now, relatively fewer people itemize than before 2018. But a higher SALT cap will likely make itemizing worthwhile again for more homeowners in high-tax locales.

What should homeowners do? Review your tax situation for the coming years. If you live in a state or municipality with high property taxes or state income tax, the higher SALT limit means you’re more likely to exceed the standard deduction with your itemized deductions. It may make sense to plan to itemize on your 2025 return (and beyond), especially if combined with mortgage interest and charitable deductions. If you’re near the phase-out income level (around $500k for a couple), consider timing of income or deductions – for instance, if a big income event might push you over the threshold in one year, bunching deductible taxes into another year could yield more benefit. This gets complex, so consulting a tax professional for strategies could be wise.

Also, keep an eye on your state tax laws. Many states created “workaround” strategies during the $10k cap era (for example, special pass-through entity taxes for business owners) to help residents circumvent the cap. With a much higher federal cap now, some of those strategies may be less needed, and states might adjust their policies. But importantly, some states could respond to the federal change by altering their own tax policy – for example, high-tax states might feel less pressure to cut property or income taxes now that the deductibility is restored. As a homeowner, understand that your total tax burden (federal + state) is what matters. The SALT deduction essentially shifts some burden back to the federal side (by giving you a break on federal taxes for what you pay locally). If you weren’t itemizing before because the cap was too low, revisit that decision in 2025.

Mortgage Insurance Premium Deduction Returns

Another homeowner-friendly change in the OBBBA tax law is the revival of the mortgage insurance premium deduction. Private mortgage insurance (PMI) is typically required if you buy a home with less than 20% down, and it can cost several hundred dollars a month on a typical loan. Previously, from 2007 through 2021, Congress allowed homeowners to deduct those PMI premiums as an itemized deduction (subject to an income phase-out). However, that deduction had expired for 2022 and 2023, leaving homeowners unable to write off PMI. The new law not only reinstates the PMI deduction but makes it permanent going forward [USMI Press Release, July 2025]. This is a win for first-time and lower-wealth homebuyers, as it effectively reduces the cost of PMI by letting you reclaim some of it at tax time. On average, when the deduction was previously in effect, about 4 million taxpayers per year claimed it, with an average deduction around $1,400 each [USMI, 2025]. Now that it’s back, those currently paying PMI (often those who bought homes with 3-10% down payments) should see some tax relief.

The PMI deduction is subject to income limits – under past rules, it started phasing out for households above ~$100,000 AGI and phased out completely by $110,000 AGI. The exact thresholds may be similar now that it’s permanent (we’ll await IRS updates). If you qualify, you can deduct both private mortgage insurance and government mortgage insurance premiums (like FHA insurance, VA funding fees allocated as insurance, or USDA fees) as well.

What should homeowners do? If you have a mortgage on which you pay PMI (or FHA/VA equivalent), make sure to claim this deduction when you file your taxes. Your mortgage lender or servicer will issue a Form 1098 annually that shows the total mortgage insurance premiums you paid in the year, much like they report mortgage interest. Enter that on Schedule A along with your other deductions. If you weren’t itemizing before, the combination of mortgage interest, property taxes, and now PMI might push you over the standard deduction – so run the numbers or ask a tax preparer. The return of the PMI write-off can mean several hundred dollars of tax savings per year for eligible homeowners, effectively offsetting a portion of your insurance cost.

Longer term, remember that once your loan balance falls below 80% of your home’s value, you can usually cancel PMI (on conventional loans). The strong home price appreciation in recent years means some people who bought with 5-10% down a few years ago may now have 20% equity. If so, contact your lender about removing PMI – that will save you far more than a tax deduction (you save the full premium, not just your tax bracket percentage of it). Each lender has specific procedures (often you need to pay for an appraisal or have a good payment history), but it’s well worth exploring. In the meantime, at least the tax code will help take a bit of the sting out of PMI costs.

State Property Tax Relief Examples

While federal tax changes grab headlines, it’s worth noting that many states have also provided direct property tax relief to homeowners in recent years. One standout example is Texas, which has some of the nation’s highest property tax levels (due to no state income tax). In 2023, Texas lawmakers and voters approved a significant boost to the homestead exemption – the portion of a home’s value that is exempt from school district property taxes. The exemption for a primary residence jumped from $40,000 to $100,000 for most homeowners (and even higher for seniors and disabled homeowners) [Hinshaw Law Firm summary]. This means, for example, a Texas homeowner with a house assessed at $300,000 now pays school taxes on only $200,000 of that value instead of $260,000, saving roughly $400–500 a year in taxes (depending on the school tax rate). This was part of a broader $18 billion Texas property tax relief package. Texas is even considering further increases – in November 2025, voters will see a constitutional amendment to potentially raise the homestead exemption to $140,000 (and $150,000 for seniors), showing the continued effort to rein in tax bills [Texas Lt. Gov. Press Release].

Other states have used surplus budgets to issue rebates or one-time givebacks. For instance, New Jersey launched the ANCHOR rebate program, sending property tax rebate checks (or credits) to homeowners (and renters) depending on income, which effectively offset a portion of their local property taxes. Georgia in 2023 utilized a budget surplus to give a one-time property tax credit to all homesteaded properties (around $500 in many cases). States like Florida have long had homestead exemptions and a “Save Our Homes” cap that limits annual assessment increases – and in 2022 Florida expanded some property tax benefits for certain groups (like additional homestead exemptions for teachers, first responders, and military in a proposed amendment). The details vary widely by state, but the trend is that many state legislatures are mindful of high property valuations and are trying to cushion the impact on homeowners.

What should homeowners do? Always apply for your state’s homestead exemption or primary residence tax relief if one is available – it’s often not automatic. In Texas, for example, you must file a form with your county appraisal district to claim the homestead exemption (and as of 2024, Texas now requires a reapplication/verification every 5 years to keep it active) [Hinshaw, 2024]. Make sure you follow those procedures, or you could be paying more tax than necessary. If your state offers special exemptions for seniors, veterans, or disabled persons and you qualify, be sure to take advantage of them. They can dramatically lower your tax bill.

Keep an eye on the news from your city or state each budget cycle. If rebate programs or one-off tax credits are enacted, you might need to fill out a short form or just be aware of how it will be delivered (some send a physical check, others apply directly to the tax bill). For example, New Jersey’s ANCHOR program required an application by a certain deadline to get the rebate. Don’t leave free money on the table due to missing a form. Most local tax collectors or county treasurers have websites detailing available relief programs – it’s worth a quick look each year.

If you’re in a state considering new measures (like Texas continuing to push up the homestead amount, or states looking to lower rates due to revenue surpluses), it can also pay to voice your support for those initiatives through local representatives, as these often require voter approval. Lastly, while enjoying tax relief, remember that it might affect your escrow if you have a mortgage. A big change like Texas’s exemption increase should lower the property taxes your lender escrows – monitor your mortgage escrow statements and ensure they adjust your monthly payment down if your tax bill drops. Conversely, if a temporary credit was applied one year, the escrow might go up the next year when the credit is gone.

Home Energy Efficiency Incentives

Federal Tax Credits for Home Improvements

Upgrading your home to be more energy-efficient or to use clean energy has long-term benefits on utility bills – and now, thanks to recent laws, it comes with significant short-term benefits at tax time. The Inflation Reduction Act (IRA) of 2022 created and expanded a suite of tax credits for homeowners who make qualifying improvements. As of 2023, these credits became available, and millions of Americans are starting to take advantage. However, in mid-2025, the big tax law (OBBBA) passed by Congress curtailed some of these incentives by setting end dates of 2025, meaning homeowners have a window of opportunity to act before certain credits expire [NRDC Consumer Guide, 2025]. Here are the key federal credits still in effect:

• Energy Efficient Home Improvement Credit (IRC 25C): This credit gives you 30% of the cost back (as a tax credit) for a broad range of efficiency upgrades, capped at $1,200 per year (for most improvements) plus an additional $2,000 per year for heat pumps. Covered improvements include adding insulation, air sealing, energy-efficient exterior doors and windows, upgrading to high-efficiency HVAC systems, heat pump water heaters, efficient boilers, etc. For example, if you spend $4,000 on new attic insulation and high-efficiency windows, you could get $1,200 back as a credit. If you also purchase a qualifying heat pump HVAC for $6,000, you get another $1,800 back (30%, but capped at $2k for heat pumps). These credits reset each tax year (annual limits), and are available for improvements installed through December 31, 2025 [NRDC Guide]. (Originally the IRA had extended them through 2032, but the 2025 law accelerated the sunset.) There are no income limits to claim these credits, and you can claim them even if it’s for your secondary home (with some exceptions – things like windows/insulation require the home to be your principal residence).
• Residential Clean Energy Credit (IRC 25D): This is a 30% tax credit for installing renewable energy systems like solar panels, battery storage, solar water heaters, geothermal heat pumps, or small wind turbines. For solar photovoltaic (PV) systems especially, this is a major incentive: 30% of all costs (equipment and installation) can be credited on your taxes. Unlike the efficiency credit, there’s no dollar cap – it’s purely 30% of what you spend. There are also no income caps or usage restrictions (e.g. you can claim it on a second home for solar). Under current law, the full 30% credit applies to systems placed in service by the end of 2025 [NRDC Guide]. (Again, OBBBA shortened this; previously it was set to run at 30% through 2032.) If you install solar in 2025, you’ll claim the credit on your 2025 tax return filed in 2026. Note: if your tax liability is smaller than the credit, you can carry over unused credit to future years.
• Home energy audits: You can get a $150 tax credit for the cost of a professional home energy audit. This is a one-time per year credit and counts toward the $1,200 cap. The audit must be conducted by a qualified assessor following DOE or utility-approved methods. While $150 is modest, an audit can uncover the most effective upgrades for your home, and you might combine it with utility rebates. Consider doing this first to prioritize your improvements.
• Other miscellaneous credits: The IRA also extended credits for things like electric vehicle chargers (30% credit up to $1,000 for installing a home EV charging station, available through 2032) – useful if you own an EV. And if you live in an older home in a historic district, there’s an energy-efficient retrofit credit (30% of rehab costs up to $50,000) for certain whole-house retrofits, though this is a niche benefit.

The net effect is that the federal government is currently willing to subsidize a significant chunk of home improvement projects that lower energy consumption. For example, if you need a new furnace or A/C, choosing a heat pump could yield a $2,000 credit. Adding insulation and better windows could get you another $1,200. Solar panels on the roof might be 30% off via the credit. These are real savings – credits directly reduce your tax bill, dollar for dollar. But time is of the essence, as some of these incentives are slated to end after 2025 unless new legislation extends them.

What should homeowners do? If your home could use efficiency upgrades or you’ve been considering solar, plan those projects soon. The next couple of years (2024–2025) are prime time to capture federal incentives. Keep in mind the annual caps: for example, you might spread projects across two calendar years to maximize credits (do some in late 2024 and others in early 2025, etc., to utilize $1,200 + $1,200 + $2k + $2k if you have that many upgrades). Always save receipts and certification documents. The IRS will likely require you to file Form 5695 for these credits, and you should keep records that the products you installed meet the required efficiency standards (manufacturers often provide a certification statement for tax purposes).

Also, check for *stackable* savings: Many utility companies and state programs offer rebates for the same improvements (like $ rebate per insulation square foot, or a discount on a smart thermostat, etc.). You can generally use a utility or state rebate *and* still claim the federal credit on the post-rebate cost (the IRA does not let you “double-dip” federal rebates with credits on the same expense, but utility rebates are fine). For example, if your utility pays you $500 to upgrade to a high-efficiency heat pump, and it costs you $5,000 out of pocket after that rebate, you can still take 30% of $5,000 = $1,500 as a federal credit. Do read the fine print: the IRS expects you to subtract any subsidized portion from the amount you claim for the credit. Some states also give state tax credits; those vary (e.g., New York has a state credit for solar installations).

State-Administered Rebate Programs

The IRA not only provided tax credits but also funded new home energy rebate programs to be administered by state energy offices. These rebates are separate from tax credits – they are upfront discounts or cash rebates for qualifying projects, targeted especially at low- and moderate-income households. There are two main programs: the Home Electrification and Appliance Rebate (HEAR) program and the Home Efficiency Rebate (HER) program. Together, they were designed to offer up to $14,000 to eligible households for electrification and efficiency upgrades. The catch is that each state has to set up its own system to distribute these rebates, and rollout has been slow. As of early 2025, only about a dozen states have launched their rebate programs, with most others expected to come online later in 2025 or beyond [Rewiring America, Jan 2025].

The **Electrification (HEAR) rebates** focus on helping people install things like heat pump HVAC systems (up to $8,000 rebate), heat pump water heaters (~$1,750), electric stoves ($840), electric dryers, and upgrading electrical panels or wiring ($4,000 for panel, etc.), with maximum $14,000 per household. These rebates are largely for lower-income households (generally, under 150% of area median income). If you qualify, the idea is that you could get these rebates as a point-of-sale discount – for example, a contractor could give you an $8k discount on a $15k heat pump installation and get reimbursed by the program. The **Efficiency (HER) rebates** reward overall energy savings achieved by retrofits. Depending on how much you cut your home’s energy usage (measured or modeled), you can get rebates like $2,000 for 20% energy reduction, up to $4,000 for 35% reduction (doubles for low-income households). These too have caps and income limits for certain levels.

Some states have already begun offering one or both types of rebates. By the end of January 2025, states including Arizona, California, Colorado, Georgia, Maine, Michigan, New Mexico, New York, North Carolina, Rhode Island, Wisconsin, plus Washington D.C., had launched their electrification rebate programs in some form [Rewiring America, 2025]. A few (Georgia, Michigan, N. Carolina, D.C., Wisconsin) also had their efficiency rebates available. Other states have delayed implementation due to uncertainty in federal funding (there was discussion in Congress about clawing back some of these funds). If your state hasn’t rolled it out yet, it likely will later in 2025 or 2026, unless federal changes intervene.

What should homeowners do? First, find out the status of the rebate programs in your state. A good resource is your state’s energy office or websites like the Department of Energy’s Energy Saver site. You can also refer to the Home Energy Rebate Tracker to see which states are active. If the programs are active where you live and you meet the income criteria, plan your projects to take full advantage. Typically, you won’t combine these rebates with federal tax credits for the *exact same expense* (to avoid double dipping the exact dollars), but you can certainly use rebates for part of a project and tax credits for the rest. For example, if you’re low-income and get an $8,000 HEAR rebate off a $15,000 heat pump install, you could potentially claim 30% tax credit on the remaining $7,000 that you paid – effectively layering both incentives.

Be aware that these programs may require using approved contractors or getting pre-approval before work. Check the rules: some states might require an energy audit or certain paperwork. The rebates might also run out if funds are limited (each state got an allocation). So, when your state launches, if you qualify, try to apply early. On the other hand, if your income is too high to qualify for the rebates, you still have the tax credits to rely on (which have no income limit). Also, even aside from these IRA-funded rebates, many states and utilities continue to offer their own incentives (e.g., rebates for HVAC through your electric company). A handy site to find all levels of incentives is the DSIRE database – just enter your state and it lists federal, state, and utility programs for energy savings.

The bottom line is: a homeowner looking to improve their home’s efficiency or resilience has an unprecedented menu of incentives in 2024–2025. You can save significantly on taxes, and possibly get upfront discounts, for doing the kinds of upgrades that will also save you money in the long run on energy bills. The opportunity won’t last forever (especially with some federal programs potentially sunsetting), so it’s wise to take advantage sooner rather than later.

Sources (accessible as of 2025):

• NCSL – “Homeowners and Renters Insurance 2025 Legislation” (Summary of state insurance laws)
• U.S. Treasury FIO – Press Release Jan 2025: Homeowners Insurance Costs Rising, Availability Declining (climate impact on insurance)
• Florida CFO – Summary of Recent Property Insurance Changes (2022–2025 reforms)
• Florida Governor Press Release Feb 5, 2025 – Insurance market progress update
• California Department of Insurance Press Release July 24, 2025 – “Reform made real” (wildfire insurance reforms)
• Sen. Cassidy Press Release June 10, 2025 – Letter demanding end to Risk Rating 2.0 (flood insurance data)
• Thomson Reuters Tax & Accounting Blog – SALT Cap Changes in OBBBA (July 18, 2025)
• U.S. Mortgage Insurers (USMI) Press Release July 3, 2025 – PMI deduction restored
• Hinshaw & Culbertson law article – Texas Homestead Exemption increase and renewal law (July 22, 2024)
• Texas Lt. Governor Press – Homestead Exemption increase proposals (July 11, 2023)
• NRDC – Consumer Guide to the Inflation Reduction Act (July 28, 2025)
• Rewiring America – “Guide to the IRA” (Jan 30, 2025 update on rebates and credits)