Dubbed the Reduce Inflation Act of 2022, the agreement includes a series of incentives, such as tax credits for electric vehicles, or EVs, and sustainable home improvement efforts, which aim to change the way households consume and use electricity. energy, and could help people who want to make greener choices.
The legislation has the potential to be “transformational,” he said. leah stokesassociate professor of environmental policy at the University of California at Santa Barbara.
“The bill will make it more affordable for ordinary Americans to buy clean technology,” Stokes said. His incentives, he added, could help address some of the upfront costs associated with investing in more sustainable innovations, such as electric vehicles or energy-efficient heat pumps. In turn, Stokes and other experts emphasized, many Americans could expect to see significant reductions in their overall energy costs.
If households invest in environmentally friendly and energy efficient technologies, with financial support from the bill, it could help the average household save $1,800 on their annual energy bill, study finds Rewire America reviewa non-profit organization dedicated to electrification. Other RMI analysisA group of clean energy experts found that tax incentives for clean energy sources, which would increase the use of wind and solar power over the next decade, could save American households up to $5 billion over two years.
Here’s a breakdown of several key incentives that could have direct and practical benefits for you. Please note, however, that there are limitations and eligibility requirements that, depending on individual circumstances, may determine how much you can take advantage of some subsidies.
Tax credits for electric vehicles
Many new and used electric vehicle buyers would receive a tax credit.
The real “game changer,” Stokes said, is that the bill would also remove a previous cap that prevented popular electric vehicle makers from being able to offer tax credits once they sold a certain number of vehicles.
For new electric vehicles, a tax credit of $7,500 may be applied at the point of sale. Those who buy used electric vehicles could be eligible for a credit of up to $4,000.
The new credit for previously owned electric vehicles could be significant in helping the country move away from vehicles that run on fossil fuels, he said. Joe Brittonexecutive director of the Zero Emissions Transport Association.
“That’s going to be one of the real invisible catalysts,” Britton said, noting that about 70 percent of Americans aren’t in the market for a new car.
“Because once you get behind the wheel of an electric vehicle, you have a 95% chance of never going back,” added Britton, “so exposing Americans of all income levels to electrification is going to have an impact. really positive in our ability to transition. ”
While there has been some debate that paying people to take non-electric vehicles off the road might be a better approach, the bill’s provisions would likely be “much simpler,” he said. steven nadel, executive director of the American Council for an Energy Efficient Economy. “Programs to recall vehicles get complicated.”
Although tens of millions of Americans could benefit from these tax credits, there are eligibility requirements.
For new electric vehicles, the tax credit would apply to income less than $300,000 “for a joint return or surviving spouse,” $225,000 for those filing as head of household and $150,000 for those filing individually. For used electric vehicles, income for the same categories cannot exceed $150,000, $112,500, and $75,000, respectively.
There are also limits to how much the vehicle can cost.
“If you wanted to buy an electric Lamborghini, I’m sorry, it won’t be eligible,” Nadel said.
To be eligible for a credit, new electric vehicles that are vans, SUVs or vans cannot exceed $80,000, while other types of vehicles cannot cost more than $55,000. Used electric vehicles may be eligible if they cost no more than $25,000.
The credit is also contingent on manufacturers making eligible vehicles, Britton said. But, she noted, the bill includes funds that would help achieve those goals.
Clean energy and efficiency incentives
The bill contains numerous incentives, including rebate programs and tax credits, intended to encourage home improvements that would increase energy efficiency and use more clean energy technologies.
For example, the HOMES rebate program would reward eligible households for energy savings, Nadel said. Individuals would normally receive $2,000 if they make changes that save them 20 percent or more on overall energy costs and $4,000 if they save 35 percent or more. Those amounts could increase for low- and moderate-income households, which the bill defines as individuals or families with total incomes below 80 percent of the median income for the area in which they live. Households in underserved communities would also be eligible for incentives.
Additionally, the bill would encourage home electrification projects and efficiency improvements. Eligible persons who install heat pumps to heat or cool spaces; heat pump water heaters; electric pump clothes dryers; o Electric stoves, stoves, stoves or ovens, among other technologies, could benefit from discounts and tax credits.
Additionally, other home improvements, such as improved insulation, air sealing, or ventilation to help increase energy efficiency, could receive subsidies.
The legislation would also support residential and community solar power.
The previous credit for residential solar projects was set to expire at the end of 2023, but if passed, the bill would institute a 30 percent credit for households installing solar panels through 2032 before a subsequent two-year phase-down period.
“That’s a significant number,” Erin Duncansaid the Solar Energy Industries Association’s vice president for congressional affairs about the 30 percent credit. Duncan said the bill’s provisions “will allow the industry as a whole to have more predictability about what they can offer consumers and also allow them to make decisions based on when it’s right for them.”
Other elements of the agreement would help facilitate the advancement of community solar projects, or projects in which various members of the community can invest and benefit, he added. “Community solar power could be incredibly important in democratizing who can participate in this energy option.”
Affordable Home Improvement Funds
The agreement would also provide funding, including a $1 billion grant program, to eligible affordable housing owners or sponsors to make properties more energy and water efficient.
Some eligible projects would include addressing climate resilience and improving indoor air quality or sustainability by implementing the use of low-emission technologies, including zero-emission electricity generation, energy storage, or electrification of buildings.
If affordable housing properties are able to make renovations with the help of the bill’s funds, Nadel said, it would mean “tenants in those apartments will have much more modern, comfortable, energy-efficient apartments” and lower energy bills.
In general, experts have largely praised the climate deal and called on lawmakers to move quickly to pass legislation so people can start taking advantage of these incentives.
“For consumers, this is a game changer in the most positive way that will make our communities more resilient and help us keep our costs manageable,” Duncan said. “We’re also going to create tons of jobs for our neighbors, or maybe for ourselves, so I think that’s very exciting.