October 3, 2022

In addition to the US emissions reductions it will bring, there is a lot in the bill that could change both how Americans power their homes and the types of vehicles they drive.

The bill contains a set of tax incentives aimed at pushing consumers, developers, small businesses and others toward clean energy and more efficient use of energy — helping to lower the cost of purchasing electric cars, heat pumps, water heaters, rooftop solar panels and more.

These measures will be more comprehensive than current weathering programs, and many of them will be available to all families, not just low-income families, said Mark Wolf, executive director of the Association of National Energy Aid Managers.

Tax credits work another way to cut costs: stimulating cheaper, clean electricity powered by renewable energy.

“There are people who are really on the front lines of the inflation crisis and how high fossil fuel prices are because of Putin’s invasion of Ukraine, and this bill is going to provide significant energy savings for these people,” Leah Stokes, a senior policy advisor to Evergreen and Associate Professor of Political Science at the University of California, Santa Barbara, said. to reporters recently.

Here are the main parts of the bill that help consumers save money.

Savings on buying an electric car: The bill extends the current $7,500 tax credit for a new car, as well as the $4,000 tax credit for a used electric vehicle. It also gets rid of the current cap that cuts automakers off tax credits after they’ve sold 200,000 electric vehicles, and was written so buyers can get an immediate discount at the dealership, rather than waiting weeks or months for their tax credit to come in. .

One important caveat remains: Automakers and consumers likely won’t be able to take advantage of this tax credit for the next few years. At the insistence of Democratic Senator Joe Manchin, the tax credit was written in such a way that automakers would be forced to move electric vehicle supply chains away from China and into the United States and countries with US Free Trade Agreements. Cars must be made in North America, and electric car batteries must not come from countries like China.

As a result, it is likely that US automakers will not be able to provide credit in the next few years as they try to build their own domestic supply chains, Democratic Senator Debbie Stabeno of Michigan said.

The tax credit is also limited to trucks, vans, and SUVs under $80,000, and other vehicles under $55,000 that have an income limit for consumers.

The new tax credits will cover 30% of the cost of high-efficiency air conditioners, water heaters, furnaces and other home heating cooling devices.

Help install more efficient air conditioning and heating: The bill would provide Americans with tax credits to cover 30% of the costs of installing high-efficiency air conditioning, water heaters, ovens, and other cooling and heating equipment.

Families can get up to $600 per piece of equipment, up to $1,200 per year. There will also be a special credit of up to $2,000 for electric heat pumps. The credits can be used to upgrade the circuit breaker boxes, if necessary, to handle the additional electrical load.

The measure replaces a similar tax credit that expired at the end of last year and came with a maximum of $500.

Helping low- and middle-income Americans buy electrical appliances: The legislation calls for low- and middle-income families to be given rebates of up to $14,000 for the purchase of electrical appliances.

Rebates can cover between half the typical $14,000 cost of installing an electric heat pump, plus much of the cost of electric water heaters, stoves, ovens, and clothes dryers, as well as upgrading breakout boxes and electrical wiring in the home. The legislation allocates $4.5 billion over 10 years for this provision.

To ease concerns that low-income families will have to pay for items up front, rebates can be offered at the point of sale or contractors can claim them, for example. It will depend on how the government energy offices, which will administer the rebates, set up their programs.

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Rebates for home remodeling: Families can get discounts of up to $4,000 to install energy-saving measures throughout their homes, under the bill. Low- and middle-income Americans can earn up to $8,000. The amount of the discount depends on the estimated savings that will be realized. The legislation will provide a total of $4.3 billion in funding over 10 years.

Tax credits to reduce energy leakage: Americans can get tax credits to cover 30% of the costs of home improvements that reduce energy leakage, such as windows, doors, updated insulation, and other weathering measures, by law. They can receive credit of up to $600 per improvement and a total of $1,200 per year. Additionally, they can receive a $150 credit for doing a home energy audit. The credit will be expanded so that families can use it multiple times to make upgrades over time.

Efficiency Enhancement in HUD Residences: The bill would provide $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 electricity upgrades or meet climate resilience needs. Improvements can include insulation, HVAC upgrades, flood resistance, storm resistance, water supply changes, and the installation of solar or other renewable energy systems

The credits in the bill will also cover 30% of the cost of the rooftop solar system and battery storage.

Tax credits for developers for building energy-efficient homes: Builders can receive tax credits of $2,500 for single-family or manufactured homes and $500 for units in multi-family buildings for the construction of Energy Star certified homes. Developers can earn $2,500 per multi-family unit if prevailing wage requirements are met.

The credits will double if the homes or units are also certified under the Department of Energy’s Zero Energy Ready Home Program.

A credit of up to $2,000 to build energy-efficient homes expired at the end of last year.

Installing solar panels on homes: The tax credits in the bill will cover 30% of the cost of purchasing a rooftop solar system and storing household batteries. The average cost of a rooftop solar system is about $20,000, to me Solar Energy Industries Association. But that initial cost will save you on your energy bill each year and add value to the home.

For those who live in apartments or can’t install rooftop solar, there are other ways to get solar energy and lower energy bills, including renting a rooftop solar system or joining a community solar farm to deliver the power. Increase bill tax credits for solar projects in low-income communities, too.

Small Business Incentives: Small businesses can get tax deductions of up to $1 per square foot of their business to make the space more energy efficient. They can get tax credits that cover up to 30% of the cost of replacing car and truck fleets with clean vehicles, as well as incentives to support their solar business.

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