How to Lower Your Energy Bill: No-Cost, Low-Cost and Big Upgrades

If you want to know how to lower your energy bill, start where the money goes. In most U.S. homes, heating, cooling and hot water use far more energy than lights or gadgets, so small changes there pay off fastest. This guide ranks the options from free habit changes to low-cost fixes to big upgrades, using savings figures from the U.S. Department of Energy (DOE), ENERGY STAR and the U.S. Energy Information Administration (EIA), and links to our detailed guides on each topic.

Where does your energy money actually go?

Heating and cooling are the largest share. EIA found that space heating and cooling made up 52% of household energy use, and water heating, lighting and refrigeration together made up another 25% (EIA, survey data for 2020). That means most of your savings will come from the heating and cooling system, the building around it and the water heater.

ENERGY STAR puts heating and cooling at almost half of the average household’s annual energy bill, or more than $900 a year. DOE says water heating is typically the second largest energy expense, at about 18% of a home’s energy use.

To get a feel for electricity costs, EIA reports that the average U.S. residential customer used about 899 kilowatt-hours (kWh) a month (EIA, data for 2022). The average U.S. residential electricity price was about 18.3 cents per kWh in July 2026, up from about 17.5 cents a year earlier (EIA, preliminary data). At those averages, a typical household would pay roughly $160 a month for electricity alone. Your own bill depends heavily on your state, your heating fuel and your home.

Ranked: the best ways to lower your energy bill

The best order is free habits first, then low-cost fixes that pay back within a year or two, then larger upgrades guided by a home energy audit. The table below ranks common options by cost and the savings official sources report. Savings are not additive: each fix lowers the base the next one works on.

What can you do for free today?

The free steps target the biggest energy users: lower the heat and raise the cooling setting when you sleep or are away, set the water heater to 120°F, wash clothes in cold water, run full dishwasher loads and turn off what you are not using. These habits cost nothing and start saving on your next bill.

1. Set back the thermostat. DOE says turning it back 7°F to 10°F for 8 hours a day can save as much as 10% a year on heating and cooling. If you have a heat pump, use a thermostat designed for heat pumps, because a large manual setback can trigger costly backup heat.
2. Check the water heater setting. DOE recommends 120°F as safe for most households. If anyone in your home has a weakened immune system or chronic respiratory disease, ask a doctor what setting is right.
3. Wash in cold water. ENERGY STAR says hot water accounts for about 90% of the energy a clothes washer uses.
4. Run full loads in the dishwasher and washer, and let dishes air dry.
5. Use ceiling fans in summer, but only when you are in the room. DOE says a ceiling fan lets you raise the thermostat about 4°F with no loss in comfort.
6. Close blinds on hot afternoons and open south-facing curtains on sunny winter days.
7. Keep vents and registers clear of furniture and rugs.
8. Set the thermostat fan to Auto, as DOE recommends, unless an indoor air quality professional set it to run continuously.
9. Clean the dryer lint trap before every load. ENERGY STAR says that alone can save up to $34 a year.

Which low-cost fixes pay back fastest?

LED bulbs, a fresh HVAC filter, weatherstripping and caulk, advanced power strips, and insulation for the water heater and pipes cost little and usually pay back quickly. ENERGY STAR says replacing your five most-used bulbs or fixtures with ENERGY STAR lighting saves about $40 a year.

Lighting. DOE says an ENERGY STAR certified LED bulb uses up to 90% less energy than an old incandescent bulb, lasts 15 to 25 times longer, and can save about $55 in electricity over its lifetime. Start with the lights you use most.

Filters and maintenance. ENERGY STAR suggests checking your HVAC filter every month, especially in heavy-use seasons, and changing it at least every three months. A dirty filter makes the system work harder. A yearly professional tune-up keeps equipment running efficiently.

Air sealing. DOE says sealing uncontrolled air leaks can save 10% to 20% on heating and cooling bills. Caulk around window trim, weatherstrip doors, and add foam gaskets behind outlet covers on exterior walls. The bigger leaks are often hidden in the attic and basement. Our air sealing guide shows where to look and how to stay safe with fuel-burning appliances.

Smart thermostat. An ENERGY STAR certified smart thermostat saves about 8% of heating and cooling bills, or about $50 a year on average, and up to about $100 in homes that are empty much of the day. Read what smart thermostat savings look like in practice before you buy, especially if you have a heat pump.

Water heater and pipes. DOE says insulating a hot water tank that is warm to the touch can save 7% to 16% a year on water heating, and insulating hot water pipes can save another 3% to 4%. Follow the maker’s instructions, and keep insulation away from the burner and flue on gas models.

Electronics. DOE says devices that draw power when switched off could add 5% to 10% to a monthly utility bill. An advanced power strip cuts power to TVs, game consoles and computer accessories when they are not in use.

Should you get a home energy audit first?

Yes, before spending on anything major. An audit measures where your home leaks air, how much insulation it has and how your equipment is performing, then ranks upgrades by value. DOE estimates a professional assessment costs about $250 to $600 or more, and many utilities offer them free or at a reduced price.

A professional audit typically includes a blower door test and an infrared scan, which together show leaks you cannot see. It also catches safety issues, such as gas appliances that may not vent well after air sealing. Our guide to getting a home energy audit explains what to ask and a do-it-yourself checklist if you want to start on your own.

Which big upgrades are worth it?

The upgrades that usually pay off best are attic insulation with air sealing, duct sealing, and replacing old heating, cooling or water heating equipment with efficient models when it wears out. DOE says new efficient heating or cooling equipment alone can cut energy use by 20% or more, and combining it with insulation, air sealing and good thermostat settings can cut heating and cooling bills by about 30%.

Fix the building first

Insulation and air sealing make every later upgrade work better. A tighter, better-insulated home may need a smaller, cheaper heating and cooling system. ENERGY STAR estimates sealing and insulating can save up to 10% on annual energy bills. Our attic insulation guide lists recommended R-values by climate zone and compares materials.

ENERGY STAR also estimates that about 20% to 30% of the air moving through a typical duct system is lost through leaks and poor connections. Sealing ducts with mastic or metal tape, not cloth duct tape, can improve system efficiency by as much as 20%.

Replace equipment wisely

Heating and cooling equipment that is old or failing is a big opportunity. ENERGY STAR suggests having systems older than 10 years evaluated by a professional, and notes that poor installation can reduce efficiency by up to 30%, so proper sizing and installation matter as much as the model you choose.

• Heat pumps provide both heating and cooling. Our heat pump cost and savings guide compares them with furnaces and air conditioners, and our guide to heat pumps in cold climates explains how they handle freezing weather.
• Heat pump water heaters move heat from the surrounding air into the tank instead of making it directly. Our heat pump water heater guide covers sizing, space needs and costs.
• Windows improve comfort but are usually the slowest to pay back. Our energy-efficient windows guide compares replacement with repairs and low-e storm windows.

What help is still available in 2026?

Federal tax credits for home energy upgrades ended for 2026 work, but utility rebates, state-run Home Energy Rebates in some states, and income-based help such as LIHEAP and the Weatherization Assistance Program are still available. Check each program’s current rules, because funds and eligibility change.

Federal tax credits. The Energy Efficient Home Improvement Credit (25C) does not apply to property placed in service after December 31, 2025, and the Residential Clean Energy Credit (25D) does not apply to expenditures made after that date. If you finished qualifying work in 2025, you may still claim it on your 2025 return. Our guide to energy tax credits in 2026 explains the details. This is not tax advice, so confirm with a tax professional.

State Home Energy Rebates. The federal Home Energy Rebates are run by states, and only some states have launched programs, according to the National Association of State Energy Officials (NASEO) tracker. Rules changed under DOE Program Notice 26-2, effective May 29, 2026. See home energy rebates by state for the current list.

Utility rebates. Many utilities offer rebates for smart thermostats, insulation, heat pumps and audits. Check your utility’s website and the ENERGY STAR Rebate Finder.

Bill help. The Low Income Home Energy Assistance Program (LIHEAP) helps eligible households pay heating and cooling bills, and it is funded for fiscal year 2026. The Weatherization Assistance Program provides free weatherization for income-eligible households. Our guide to help paying your energy bills explains how to apply, plus utility payment plans and shutoff protections.

How do you build a simple savings plan?

Make a short, ordered plan: start the free habits this week, buy the low-cost fixes this month, schedule an audit before the next heating or cooling season, and set aside a budget for the one or two big upgrades the audit ranks highest. Track your bills to confirm savings.

1. Week 1: Set thermostat schedules, check the water heater setting, switch laundry to cold water.
2. Month 1: Replace your most-used bulbs with LEDs, change the HVAC filter, weatherstrip exterior doors.
3. Before the next season: Book a home energy audit through your utility or a certified auditor.
4. Within a year: Complete air sealing and attic insulation if the audit recommends them.
5. When equipment wears out: Replace it with an efficient model sized by a proper load calculation, rather than waiting for an emergency.
6. Every month: Compare your kWh and therms with the same month last year, not just the dollar amount, since weather and rates change.

Bottom line

The fastest way to lower your energy bill is to focus on heating, cooling and hot water, which use most of a home’s energy. Start with free changes such as thermostat setbacks, a 120°F water heater setting and cold-water laundry. Add low-cost fixes such as LEDs, filters and air sealing. Then let a home energy audit guide bigger upgrades like insulation, duct sealing and efficient heat pumps. Federal tax credits ended for 2026 work, so check your utility, your state’s rebate program and assistance programs for help.