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On August 16, President Biden signed the Inflation Reduction Act into law. While it's not entirely specific to climate change, it's a game changer as the measure legally defines greenhouse gases as pollution. In addition there are several provisions that support our efforts to transition the U.S. to clean energy which will help in reducing our greenhouse gas emissions.
It may take time to implement all the incentive programs, but there will be many tax incentives to help lower consumer energy costs. Below is a summary that relates to personal climate action, but check out this piece by Politico for more detailed information: Hot deals: A consumer’s guide to the new climate law.
Electric Vehicles Subsidies
The Details
- Starting in 2024.
- Up to $7,500 may be applied to the purchase price for a new electric vehicle.
- Up to $4,000 or 30 percent of the vehicle’s value, depending on which is lower, for a used electric vehicle.
The Limitations (for new vehicles)
- Vehicle must be assembled in North America, portion of battery must be made in North America, a percentage of the minerals that go into the battery must be mined domestically or in countries with a free-trade agreement with the U.S.
- Individual income must be less than $150,000 a year or couple income must be less than $300,000 a year.
- Sedans must be less than $55,000 and SUVs less than $80,000.
Check out the Department of Energy’s list of compliant vehicles as well as the IRS buyers guidance list.
Home Energy Efficiency Tax Credits
Details
- Energy efficient home upgrades can result in up to $1,200 in tax credits per year for a decade.
The Limitations
- Up to $150 for a home energy audit, $600 for new energy-efficient exterior windows or skylights, $500 for exterior doors, $600 for highly efficient central air conditioners; electric panel upgrades; and water heaters, furnaces and water boilers that run on natural gas, propane or oil.
- Must meet or exceed the highest efficiency tier of the Consortium for Energy Efficiency.
Heat Pumps and Wood Burning Stoves
Details
- An energy-efficient electric or gas-powered heat pump for space heating and cooling or a heat pump water heater qualifies for up to $2,000 in tax credits.
Electrification Rebates
Details
- Lowest-income households are eligible for point-of-sale rebates covering the full cost of certain electrical appliances or efficiency projects.
- Moderate-income individuals and families can get half off.
- The cumulative rebates available to each household total $14,000.
Requirements
- The qualifying households are individuals or families whose annual incomes are less than 80 percent of the area median or not greater than 150 percent of the median.
Check if you qualify here.
Solar, Batteries and Geothermal
Details
- The tax credit for solar power and geothermal heating projects increased to 30 percent of the cost of the project.
- Tax credit for home battery units with more than 3 kilowatt-hours of storage capacity was added as well.
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