In addition to the US emissions reductions these will bring, there’s a lot in the bill that could change both the way Americans power their homes and the types of vehicles they drive.
The bill includes a range of tax incentives designed to nudge consumers, developers, small businesses and others towards cleaner energy and more efficient energy use – helping to reduce the cost of buying electric vehicles, heat pumps, water heaters, rooftop solar panels and more and more to lower .
These measures would be more comprehensive than existing weathering programs, and some would be available to all households, not just low-income households,” said Mark Wolfe, executive director of the National Energy Assistance Directors Association.
The tax credits work in another way to lower costs: They provide incentives for cheaper, clean, renewable electricity.
“There are people who are really on the front lines of the inflationary crisis and know how expensive fossil fuels are because of Putin’s invasion of Ukraine, and this bill will bring huge energy savings to those people,” said Leah Stokes, Evergreen’s senior policy advisor and Associate Professor of political science at the University of California, Santa Barbara, recently told reporters.
Here are the key points of the bill that will help consumers save money.
Savings when buying an electric vehicle: The bill extends the current $7,500 tax credit for a new vehicle and a $4,000 tax credit for a used EV. It also removes the current cap that cuts off tax credits for automakers after they sell 200,000 EVs, and is written so buyers can get an instant rebate at the dealership instead of having to wait weeks or months for their tax credit.
Still, there’s an important caveat: Automakers and consumers probably won’t be able to take advantage of this tax credit for years to come. At the urging of Democratic Senator Joe Manchin, the tax credit was written in such a way as to force automakers to shift their electric vehicle supply chains away from China to the US and countries where the US has free trade agreements. Vehicles must be built in North America, and batteries for electric vehicles must not come from countries like China either.
As a result, U.S. automakers likely won’t be able to offer the loan for the next few years as they try to build up their domestic supply chains, said Democratic Sen. Debbie Stabenow of Michigan.
The tax credit is also limited to trucks, vans, and SUVs under $80,000 and other vehicles under $55,000 and has a consumer income threshold.
Help with installing more efficient air conditioning and heating units: The bill would give Americans tax credits to cover 30% of the cost of installing high-efficiency air conditioners, water heaters, stoves, and other cooling and heating appliances.
Households could get up to $600 for each device, totaling up to $1,200 per year. There is also a special loan of up to $2,000 for electric heat pumps. And credits could be used to upgrade fuse boxes if needed to handle additional electrical loads.
This measure replaces a similar tax credit that expired late last year and had a lifetime cap of $500.
Helping Low- and Middle-Income Americans Buy Electronics: The legislation would allow low- and middle-income households to rebate up to $14,000 on electrical appliance purchases.
The rebates could cover anywhere from half to all of the typical $14,000 cost of installing an electric heat pump, as well as much of the cost of electric water heaters, stoves and ovens, and clothes dryers, as well as upgrading the home’s circuit breakers and electrical wiring. The legislation provides $4.5 billion over 10 years for this provision.
For example, discounts could be given at the point of sale or claimed by contractors to address concerns that low-income households would have to prepay for items. It would depend on how the state energy departments that would administer the rebates set up their programs.
Home Retrofit Discounts: Households could receive rebates of up to $4,000 under the bill to install energy-saving devices in their homes. Low- and middle-income Americans could get as much as $8,000. The rebate amount would depend on the estimated savings achieved. The legislation would provide a total of $4.3 billion in funding over 10 years.
Tax credits to reduce energy losses: Americans could get tax credits under the bill to cover 30% of the cost of home improvements that reduce energy losses, such as: B. updated windows, doors, insulation and other weather protection measures. You could get a credit of up to $600 per improvement and a total of $1,200 per year. They could also get a $150 credit to have an energy audit done at home. The balance would be expanded so families could use it multiple times over time to make upgrades.
Increased efficiency in the HUD housing: The bill provides $1 billion in grants and loans for affordable housing units managed by the Department of Housing and Urban Development to increase energy or water efficiency, improve indoor air quality, make clean energy or electrification improvements or to meet climate resilience requirements. The improvements could include insulation, HVAC upgrades, flood protection, storm resilience, water-saving changes, and the installation of solar or other renewable energy systems
Tax Credits for Developers to Build Energy Efficient Homes: Homebuilders could receive tax credits of $2,500 for single family or manufactured homes and $500 for multifamily units for building Energy Star qualified homes. Developers could earn $2,500 for each multi-family unit if prevailing wage requirements are met.
The credits would double if the homes or units were also certified under the Department of Energy’s Zero Energy Ready Home program.
A loan of up to $2,000 to build energy-efficient homes expired late last year.
For those who live in apartments or cannot install solar power on their roofs, there are other ways to obtain solar power and reduce energy bills, including leasing a rooftop solar array or joining a community solar farm to provide electricity . Tax credits in the bill also increase for solar projects in low-income communities.
Small Business Incentives: Small businesses can get tax deductions of up to $1 per square foot of their store to make the space more energy efficient. They can receive tax credits that cover up to 30% of the cost of replacing car and truck fleets with clean vehicles, as well as incentives to power their businesses with solar energy.