Incentives Updates

Ann Arbor residents, Thank you for your engagement with the A²ZERO Home Energy Advisor!  Given your past participation with this program, we want to keep you abreast of relevant updates in the residential clean energy landscape on a quarterly basis. At this time, we focus on updates around incentives: federal tax credits which are on their way out, and city and state rebates which are available and here to stay. With the upcoming change in season, it’s also a great time to check on your home heating system and plan ahead for what might be next.

Federal Tax Credit Changes

At the beginning of July, Congress passed H.R.1, called the One Big Beautiful Bill Act (OBBBA), and President Trump signed the bill into law. The bill extends tax cuts, cuts federal programs including Medicaid, and for the purposes of this newsletter, eliminates and phases out several clean energy tax credits from the Inflation Reduction Act (IRA).

Focusing on the residential tax credits, there are a few key changes and associated dates to keep in mind:

• Electric vehicle tax credits (30D and 25E) will now be terminated for used and new electric vehicles acquired after Sept. 30, 2025. [30D offers a credit of up to $7,500 and 25E offers a credit of 30% up to $4,000]
• Home energy efficiency tax credits (25C) for insulation, air sealing, heat pumps, electrical panel upgrades, home energy audits, and heat pump water heaters, will be terminated for property placed in service after Dec. 31, 2025. [the 25C credit amounts vary by project from $150 to $2,000 and have a combined annual maximum of $3,200]
• Renewable energy tax credits (25D) for solar, battery storage, and geothermal heat pumps, will be terminated for property placed in service after Dec. 31, 2025. [the 25D credit is 30% of qualified costs with no cap]
• Electric vehicle charger tax credits (30C) will be terminated for chargers placed in service after Jun. 30, 2026. [credit 30C is valued at 30% of cost up to $1,000 per charging port]

The bottom line is: these tax credits will be going away at the dates listed, but there is still time to access them before they are gone.

For more information on the tax credits, Rewiring America has an explainer, and the NYU Tax Law Center has an in-depth breakdown.

Home Energy Rebates remain robust

While the tax credits are going away, other resources will still be here to help. The City of Ann Arbor’s Home Energy Rebates will continue to be available as will the State of Michigan’s Home Energy Rebates. Both of these rebate programs are unaffected by the federal tax credit changes.  Rebates and tax credits can be stacked together until the tax credits are eliminated.

Ann Arbor’s rebates include tens of thousands of dollars to make improvements to your home, including efficient all-electric heating and cooling, weatherization, induction cooking and more.  And more of the popular e-bike rebates have been issued, so if you have been considering an alternative to driving, it’s a good time to take a look at some of the City’s great e-bike shops.

Solarize groups forming now

With the renewable energy tax credits being terminated for property placed in service after Dec. 31, 2025, now is an advantageous time to consider solar, batteries, or adding to an existing system! Solarize Ann Arbor, Ann Arbor’s community bulk-buy solar program, has group-buys kicking off starting the first week of August. Solarize Ann Arbor helps residents gather neighbors, friends, and participating solar installers to learn about residential solar, answer questions, and obtain bulk discounts on installations. If you are interested in participating in a group, email Connor Dailey (Solarize program lead) at cdailey@a2gov.org. Solarize is open to residents in all of Washtenaw County.

Home Heating Systems

As we start to head from Summer into Fall, now is a great time to reassess the health of your home heating system. If you have a furnace that is 15 years or older, it has reached its average expected lifespan. It’s a good idea to have it checked well in advance of winter and if it appears to be at or near end of life, consider replacing with an efficient and all-electric heat pump system. Ann Arbor’s Heat Pump Concierge tool makes for a quick and easy way to get heat pump cost estimates based on basic details of your home, and our shortlist of recommended HVAC contractors can spec and quote system options as well.

Questions?

Remember, your Home Energy Advisors are here for you, whenever you have a question!  Ready to tackle that project you’ve been thinking about and want to revisit our recommendations?  Sitting on a contractor estimate you have questions about?  Book a call or drop us an email and we can help!

Note: The information provided here is for educational purposes only and should not be taken as tax advice. Consult with a tax advisor for more information and before making any financial decisions.