48 | October 2022
U
nderstanding what the big
to-do about the new Inflation
Reduction Act is all about re-
ally boils down to this:
Gas out, electricity in.
That's because replacing both natural
gas and gasoline with electricity gen-
erated by clean renewable energy will
significantly and quickly reduce car-
bon emissions and improve air quality.
Residential home energy use is the
third largest consumer of energy in
the U.S., while gasoline-powered ve-
hicles are the largest single source
of greenhouse gas emissions over-
all. Most of us get that and want to do
more to use less gas. But the cost of
switching from gas to electricity has
kept a lot of us from doing so. That's
why the Inflation Reduction Act is
such a game changer. By offering a
wide variety of financial incentives, it
will help millions of Americans cover
at least part of the cost of transitioning
from gas to electricity.
EDF has put together this
excellent guide that explains how
the Act reduces the cost of switching
specific appliances, like water heaters,
stoves, solar panels, and even electric
vehicles. But getting started with it all
can still be a bit overwhelming. Here's
what I'm doing to make sense of it that
may help you do the same.
First, understand the difference be-
tween tax credits and rebates, the two
primary ways the bill helps you cover
your costs.
Tax credits reduce your total tax
How Families Can Take Advantage of
the Inflation Reduction Act By Diane MacEachern
payment when you file your taxes. For
example, say you owe $200 in taxes. If
buying a new electric appliance garners
you a $100 tax credit, you could apply
that to your tax bill and then only pay
$100 in taxes. The more taxes you pay,
the more tax credits help you cut them.
Just be aware that if your tax credits ex-
ceed the taxes you owe, you will not get
a refund based on the excess credits.
Rebates are paid to a taxpayer re-
gardless of taxes owed. In fact, rebates
have no impact on taxes whatsoever.
Instead, they offset the purchase price
of an item when you buy it. For exam-
ple, my electric utility offers rebates
to encourage people to buy more
efficient electric refrigerators. When
I bought one and sent them proof of
my purchase, they sent me a check
