Act swiftly: Congress axing clean energy tax credits
TL/DR –
The new “one big beautiful bill” signed by President Trump on July 4 is expected to negatively impact American climate policy and consumers’ finances by derailing the nation’s efforts to lower greenhouse gas emissions. Notably, the 2022 Inflation Reduction Act, or IRA, which provided tax credits for climate-friendly purchases like heat pumps and solar arrays through 2032, has had its timeframe significantly cut. In response to the changes, consumers are being advised to make climate-friendly investments and purchases soon to take advantage of remaining credits before they disappear entirely.
The “one significant bill” President Trump signed in July revolutionizes various sectors of American life, including climate policy. Backed by the Republicans, it affects the nation’s greenhouse gas emissions efforts and may hit consumers’ wallets.
From a climate standpoint, the law’s rollbacks target renewable energy industries, presenting significant impacts on taxpayers aiming to decarbonize their homes.
The 2022 Inflation Reduction Act (IRA) provided tax credits for green purchases like heat pumps and solar arrays through 2032. Now, this duration is significantly shortened.
Lowell Ungar of the American Council for an Energy-Efficient Economy warns, “This bill removes significant consumer assistance.” However, billions of dollars already allocated to state efficiency and electrification rebate programs by the IRA remain untouched.
Here’s when certain credits will disappear:
Buy an EV before October
New electric vehicles that meet federal production standards qualify for a tax credit of up to $7,500. This disappears after September 30, making new electric vehicles less affordable for average Americans.
Make home improvements by end of the year
The extensive Energy Efficient Home Improvement Credit offers up to $2,000 toward qualified energy upgrades. These will disappear after December 31.
Pay for solar this year
The Residential Clean Energy Credit, the most valuable IRA incentive getting axed, covers 30% of clean energy systems like solar panels, wind turbines, and geothermal heat pumps. This credit disappears after this year. But Ungar advises that even after the credits end, many of these improvements could still be financially viable in the long run.
—
Read More US Economic News