The deal, dubbed the Inflation Cut Act of 2022, includes a slew of incentives, such as tax credits for electric cars, or electric vehicles, and sustainable home improvement efforts, which are intended to change the way families consume and use energy, and can help willing individuals in that. To make greener choices.
He said the legislation has the potential to be “transformative.” Leah StokesAssociate Professor of Environmental Policy at the University of California, Santa Barbara.
“The bill would make the cost of clean technology more affordable for ordinary Americans,” Stokes said. It added that its incentives could help address some of the upfront costs associated with investing in more sustainable innovations, such as energy-efficient electric vehicles or heat pumps. In contrast, Stokes and other experts emphasized, many Americans can expect to see significant reductions in overall energy costs.
If households invest in climate-friendly and energy-efficient technologies, with the financial backing of the bill, it could help the average household save $1,800 in annual energy bill, according to one study. Analysis by Rewiring Americaa non-profit organization dedicated to electricity. Another analysis from RMIa clean energy think tank, found that tax incentives for clean energy sources, which would increase the use of wind and solar energy over the next decade, could save American households up to $5 billion within two years.
Below is a breakdown of several key incentives that may have immediate practical benefits to you. However, keep in mind that there are restrictions and eligibility requirements that, depending on individual circumstances, may determine how much you can take advantage of some benefits.
Tax credits for electric cars
Many buyers of both new and used electric vehicles will receive a tax credit.
A “real game-changer”, Stokes said, is that the bill would also repeal an earlier limit that prevented popular electric car manufacturers from offering tax credits once they sold a certain number of vehicles.
For new electric vehicles, a $7,500 tax credit can be applied at the point of sale. Those who buy used electric vehicles can be eligible for a credit of up to $4,000.
New credit for previously owned electric vehicles could be important in helping the country move away from vehicles powered by fossil fuels. Joe BrittonExecutive Director of the Zero Transport Association.
“That would be one kind of really invisible stimulus,” Britton said, noting that about 70 percent of Americans aren’t in the market for an entirely new car.
Britton added, “Because once you get behind the wheel of an electric car, it’s 95 percent more likely to never come back, so exposing Americans of all income levels to electricity will have a really positive impact on our ability to transform.”
Although there is debate that paying people to get non-electric vehicles off the road might be a better approach, the law’s provisions are likely to be “much simpler,” steven bartender, executive director of the American Council on an Energy Efficient Economy. “Decommissioning programs are getting complicated.”
Although tens of millions of Americans can benefit from these tax credits, there are eligibility requirements.
For new electric vehicles, the tax credit applies to incomes less than $300,000 “in the event of a joint return or surviving spouse,” $225,000 for those filing as head of household and $150,000 for individual subscribers. For used electric vehicles, incomes for the same categories cannot exceed $150,000, $112,500 and $75,000, respectively.
There are also limits to how much a car can cost.
“If you wanted to buy an electric Lamborghini, sorry, it wouldn’t qualify,” said a waiter.
To be eligible for a credit, new electric vehicles that are vans, SUVs or pickup trucks can’t exceed $80,000 while other types of vehicles can’t cost more than $55,000. Used electric vehicles can qualify if they cost no more than $25,000.
The credit also depends on manufacturers making eligible cars, Britton said. But he noted that the bill includes funding that would help achieve those goals.
Clean energy and efficiency incentives
The bill contains several incentives, including rebate programs and tax credits, aimed at encouraging home improvements that would increase energy efficiency and use more clean energy technologies.
For example, the Homes discount program will reward eligible families for saving energy, Bartender says. People will typically get $2,000 if they make changes that save them 20 percent or more of their total energy costs And $4,000 if they save 35 percent or more. These amounts can increase to low- or middle-income families, which the bill defines as individuals or families with a total income of less than 80 percent of the median income in the area in which they live. Families in disadvantaged communities will also be eligible for incentives.
In addition, the bill will encourage home electrification projects and efficiency upgrades. Qualified persons who install heat pumps for heating or cooling premises; Heat pump water heaters. Electric pump clothes dryers. Electric stoves, fireplaces, stoves, or ovens, among other technologies, can benefit from tax rebates and credits.
Furthermore, other improvements in the home, such as upgrading insulation, sealing or ventilation, can also be supported to help boost energy efficiency.
The legislation will also support residential and community solar energy.
The previous credit for residential solar projects was due to expire at the end of 2023, but if passed, the law would create a 30 percent credit for households installing solar panels through 2032 before a subsequent two-year supplementary period.
“This is an important number,” Erin Duncan, the vice president for congressional affairs at the Solar Energy Industries Association said about the 30 percent credit. Duncan said the provisions in the bill would “allow the industry as a whole to have greater predictability of what it can offer consumers, and will allow consumers to make choices based on when it’s convenient for them.”
She added that other elements of the agreement will help make it easier for community solar projects – or projects in which many members of the community can invest and benefit – moving forward. “Community solar can be incredibly important to democratizing who can participate in this energy choice.”
Funds to improve affordable housing
The deal will also provide funding, including a $1 billion grant program, to owners or sponsors of eligible affordable homes to make the properties more energy and water efficient.
Some eligible projects may include addressing climate resilience as well as improving indoor air quality or sustainability, and implementing the use of low-emission technologies, including zero-emission electricity generation, energy storage or building electrification.
If affordable residential properties were able to make renovations with the help of bill financing, Nadell said that would mean “the tenants of those apartments would have more modern, comfortable, energy-efficient apartments” and lower energy bills.
Overall, the experts largely praised the climate agreement, and called on lawmakers to move quickly to pass the legislation so that people can start taking advantage of those incentives.
“For consumers, this is a fundamental change in the most positive ways that will make our communities more resilient and help us control our costs,” Duncan said. “We’re also going to create a lot of job opportunities for our neighbors, or maybe ourselves, so I think it’s really exciting.