Here’s the Post’s guide to the top climate-friendly benefits of the Inflation Reduction Act, and how to access them.
Tax credit available on Jan. 1: 30 percent of the cost, up to $2,000
Income limit: None
These appliances run on electricity and move heat, instead of creating it, and so can be more efficient than traditional gas or electrical resistance heaters.
According to one analysis using data from the National Renewable Energy Laboratory, switching to a heat pump can save homeowners anywhere from $100 to $1,200 per year on heating bills and prevent anywhere from 1 to 8 metric tons of carbon dioxide emissions per year. For comparison, going vegan for an entire year saves about 1 metric ton of CO2 emissions.
Tax credit available on Jan. 1: Up to $7,500 depending on the make and model of the car
Income limit: <$150,000 for single filers; <$300,000 for joint filers
Starting Jan. 1, a new EV tax credit will offer consumers up to $7,500 off the purchase of an electric vehicle. For the first few months, Americans will get somewhere between $3,751 and $7,500 off their purchase of an EV, depending on the size of the battery in the car.
There are limitations, per the new law. The vehicles will also have to be assembled in North America, and cars that cost more than $55,000 aren’t eligible, nor are vans or trucks that cost more than $80,000. This week, the Internal Revenue Service provided a list of vehicles that are expected to meet the criteria starting Jan. 1.
Beginning about March, however, that $7,500 credit will be split into two parts: Consumers can get a $3,750 credit if the vehicle has a battery containing at least 40 percent critical minerals from the United States (or a country that the United States has a free-trade agreement with) and another $3,750 credit if at least 50 percent of the battery’s components were assembled and manufactured in North America. Those rules haven’t been finalized yet, so the tax credit starting on Jan. 1 is a stopgap measure until the White House has ironed out the final version.
Tax credit available now: 30 percent of the cost of installation, no cap
Income limit: None
For those who want to generate their own clean energy, there is always rooftop solar panels. This tax credit has actually been available since the Inflation Reduction Act was signed into law in August 2022. It offers a tax credit equal to 30 percent of the cost of installing rooftop solar, with no cap. According to Rewiring America, the average 6 kilowatt solar installation costs about $19,000, making the average solar tax credit about $5,700. (The Inflation Reduction Act also includes a 30 percent tax credit for homeowners that need to upgrade their electricity panel for rooftop solar, and a 30 percent tax credit for installing battery storage.)
For people who don’t own their own homes, there are other options as well. Renters can subscribe to a community solar project to lower their electricity bills and get indirect benefits from the tax credits.
There are many other credits also coming out in 2023: for EV chargers (up to $1,000), heat pump water heaters (up to $2,000), and even cash for sealing up the doors and windows of your home (up to $1,200).