Explaining the Affordable Clean Energy Plan

These two federal climate funding initiatives complement one another. The Inflation Reduction Act provides financial incentives to businesses, schools, non-profits, and households to generate clean energy, improve efficiency, and swap out old fossil fuel-based systems, vehicles, and appliances for new, healthier, electric alternatives. The Infrastructure, Investment and Jobs Act provides a huge, and sorely needed, investment to modernize the United States’ infrastructure. Some of the investments in these laws come through grant programs that ensure that federal funding is accessible and prioritizes disadvantaged communities for investment.

Combined, these massive investments are fostering the clean energy transition and building modern, efficient, and reliable infrastructure. These policies will help us generate clean energy to power our homes and transportation systems. Neighborhood by neighborhood, they’ll enable us to modernize our homes and schools, access solar energy, purchase clean, electric appliances, and transition to electric vehicles. The result will be a healthier climate and healthier communities.

See the next section on Justice40 — or J40 for short — an equity-centered effort that ensures funds from federal programs are used to invest in communities that have been historically disinvested in or neglected so that they are not left behind in the U.S. transition from polluting systems to clean electric ones.

The information on this page is not intended as legal or tax advice for specific individuals or organizations or actual determination of eligibility for tax credits and/or deductions of any particular project or activity. Please visit the IRS website for more information on tax credits and deductions under the Inflation Reduction Act of 2022, and you may choose to consult with a tax advisor.

In January 2021, President Biden issued an executive order titled “Tackling the Climate Crisis at Home and Abroad.” It included several important climate initiatives including Justice40.³The 2021 Executive Order “Tackling the Climate Crisis at Home and Abroad,” also established the White House Office of Domestic Climate Policy, Civilian Climate Corps, and the White House Environmental Justice Advisory Council (WHEJAC).

Justice40 is an initiative where multiple government agencies and departments must work together with states to ensure at least 40 percent of the overall benefits from federal investments are directed to disadvantaged communities.⁴The working definition of “Disadvantaged Communities” is based on cumulative burden and includes data for 36 burden indicators collected at the census tract level, grouped by fossil fuel dependence, energy burden, environmental and climate hazards, and socio-economic vulnerabilities.

Federal agency programs covered by Justice40 fall into one or more of the following seven investment areas:

• Climate change
• Clean energy and energy efficiency
• Clean transportation
• Affordable and sustainable housing
• Training and workforce development related to the six other Justice40 investment areas
• Remediation and reduction of legacy pollution
• Critical clean water and wastewater infrastructure

The initiative aims to begin addressing high levels of pollution, chronic disinvestment, and lack of access to funds in communities of color and low-income communities. This legacy of inequity has been driven by discriminatory environmental, housing, infrastructure, and economic policies. Learn more about the Justice40 Initiative here.

The information on this page is not intended as legal or tax advice for specific individuals or organizations or actual determination of eligibility for tax credits and/or deductions of any particular project or activity. Please visit the IRS website for more information on tax credits and deductions under the Inflation Reduction Act of 2022, and you may choose to consult with a tax advisor.

In the past year, the Inflation Reduction Act has already spurred $242.81 billion in private investments (PDF), largely in building clean energy and associated manufacturing, leading to over 140,000 new jobs. As a solar company leader recently remarked: “We will always look at the history of our industry in two eras now … [before and after] the Inflation Reduction Act.”

The impact is powerful and widespread. These investments and new jobs are being created all around the country, in 41 states—red, blue, purple—and counting. The IRA is projected to create more than 9 million new, family-supporting jobs over the next decade (PDF). What’s more, these jobs cannot be offshored or outsourced to other countries. We’ll need tens of thousands, if not hundreds of thousands, of new electricians and HVAC (heating, cooling, and ventilation) technicians as well as manufacturing workers in EV, solar, and other clean energy industries. The economic engine of this century is just getting started.

Finally, the affordable clean energy plan is specifically designed to bring manufacturing supply chains back to the U.S., so that our nation receives the economic benefits of creating and delivering products from start to finish. Not only does this help with job security and economic revival but it will help the U.S. achieve energy independence. Reducing our reliance on pricey and unpredictable energy sources like oil and gas means lessening our dependence on anti-democratic forces in rich fossil-fuel exporting countries. As the largest clean energy investment in our history—the plan has put the U.S. back in the (EV) driver’s seat, ready to lead the world in the clean energy transition.

The information on this page is not intended as legal or tax advice for specific individuals or organizations or actual determination of eligibility for tax credits and/or deductions of any particular project or activity. Please visit the IRS website for more information on tax credits and deductions under the Inflation Reduction Act of 2022, and you may choose to consult with a tax advisor.

The federal clean energy tax credits, which work by reducing the money you owe on your federal taxes, are available now! Read on below for how you can lower your federal taxes based on which appliances and equipment and upgrades you do.

• Energy Efficient Home Improvements – up to $3,200 off, each year (25C)
  • Section 25C offers a 30% tax credit, up to $1,200 per year for most projects including weatherization and insulation, with a separate $2,000 cap for heat pumps and heat pump water heaters.
  • There’s also a $150 tax credit for energy audits.
  • Applies to purchases for weatherization projects (insulation, doors, windows) and the purchase and installation of heat pumps, heat pump water heaters, and electrical panel upgrades.
  • Available now through 2032, with no upper-income limit.
  • For more information visit the IRS 25C webpage here and download the IRS fact sheet on energy efficient home improvements and residential clean energy property credits here (PDF).
• Rooftop Solar and other Clean Energy – 30% off (25D)
  • Section 25D offers a 30% uncapped tax credit for rooftop solar installation, solar-powered water heaters, small wind energy, geothermal heating installation, and battery storage installation.
  • Available now with no income limit; phases down to 26% in 2033, and 22% in 2034, expires in 2034.
  • For more information download the IRS fact sheet on energy efficient home improvements and residential clean energy property credits here (PDF).
• New Electric Vehicle – up to $7,500 off (30D)
  • Section 30D offers a 30% tax credit of up to $7,500 for new electric vehicles manufactured in the United States.
    • Available now on some electric vehicles for households with incomes below $300,000 for joint filers and $150,000 for most other filers
    • Detailed information about eligibility (income, critical mineral and battery requirements, and manufacturer-suggested retail price) requirements is available here.
    • For more information on eligible electric vehicles visit here.
• Used Electric Vehicle – up to $4,000 off (25E)
  • Section 25E offers a 30% tax credit of up to $4,000 for used electric vehicles.
    • There are income limits of $150,000 for joint filers and $75,000 for most other filers, and there are manufacturer’s suggested retail price limits but no manufacturing requirements.
    • Detailed information about qualified vehicles, income eligibility, and more is available here.
  • Available now through 2032.
• EV Charger – 30% up to $1000 off (30C)
  • Section 30C offers a 30% tax credit dedicated to low-income or rural areas toward the total purchase and installation of EV charging equipment—up to $1,000 per charger.
    • Includes bi-directional chargers.

The IRA also provides upfront discounts on electric appliances and other efficiency upgrades. These are one of the few options also available for landlords to improve the energy efficiency for their tenants. States will be starting up these programs in 2024. The latest rebate information can be found in the White House’s Inflation Reduction Act Guidebook here and the Department of Energy’s similar guide here. Note that some program eligibility is determined by income.

If you would like to better understand how your household can benefit from the Inflation Reduction Act, Rewiring America has an IRA Savings Calculator that can determine what, and how much, you’re eligible to save.

• Electric Appliances — up to $14,000 per household
  • $4.5 billion from the IRA is reserved for discounts applied when you purchase electric appliances or supporting systems. These rebates can cover up to 100% — up to $14,000 — of the costs for electrification projects for low-income consumers⁵Defined as earning less than 80 percent of their Area Median Income and 50% for moderate-income consumers.⁶Defined as earning between 80 and 150 percent of their Area Median Income Within the $14,000 per household limit, individual upgrades are subject to the following caps:
    • Heat Pump – $8,000
    • Electric Load Service Center – $4,000
    • Electric Wiring – $2,500
    • Heat Pump Water Heater – $1,750
    • Weatherization – $1,600
    • Electric/Induction Stove – $840
    • Heat Pump Clothes Dryer – $840
• • Home Efficiency Improvements – $2,000 to $8,000 per household or more!
    • The Efficiency Rebates program sets aside $4.3 billion for energy-efficient upgrades. Homeowners and landlords can work with contractors to access these discounts on whole-home energy efficiency upgrades — adding insulation and air sealing, plus new more efficient appliances. If you’re a renter, this is a great opportunity to let your landlord know how these upgrades could make the property more energy efficient while reducing energy expenses. Qualifying for these benefits involves a property owner hiring a contractor to estimate projected energy savings. Higher energy savings will enable even higher rebate levels.
      • If the upgrade is modeled to save 35% or more energy you can get up to $4,000 or 50% of project costs, whichever is less.
      • If the savings are modeled between 20% and 34%, you can get up to $2,000 or 50% of project costs, whichever is less.
      • Measured energy savings allow for uncapped rebates — the more you save over 15% the larger the rebate — and builds in accountability for achieving promised savings.
      • Low-income households (earning less than 80% of the Area Median Income) receive double incentives, up to 80% of project costs.

Note, you can’t combine Efficiency Rebates with Electrification Rebates for the same upgrade, but you can use both programs for different upgrades in a single project. Learn more about the Home Energy Rebate Programs including all the latest program guidance from DOE here.

The information on this page is not intended as legal or tax advice for specific individuals or organizations or actual determination of eligibility for tax credits and/or deductions of any particular project or activity. Please visit the IRS website for more information on tax credits and deductions under the Inflation Reduction Act of 2022, and you may choose to consult with a tax advisor.

The affordable clean energy plan’s investments in our homes and infrastructure can help individuals and families in all zip codes cut down on their energy bills, improve indoor and outdoor air quality, and modernize the technologies we use every day to help curb climate change.

In addition to saving money annually, going fully electric in our homes can shield the economy from energy price spikes and help combat inflation.

The Inflation Reduction Act is a remarkable achievement projected to position the U.S. to reach 80% of our 2030 climate target. The climate provisions of the Infrastructure Investments and Jobs Act result in additional progress.

Savings from the Transition to Heat Pumps

Above shows state-by-state how much the average household would save annually on their utility bills if they switched from electric resistance heating to an electric heat pump. The large number represents the dollar amount of savings and the smaller number at the bottom right corner represents the percentage of the state that uses electric resistance heating, thus, the percentage of the state that could expect this kind of savings.

Above shows state-by-state how much the average household would save annually on their utility bills if they switched from propane or fuel oil heating (also known as “delivered fuels”) to an electric heat pump. The large number represents the dollar amount of savings and the smaller number at the bottom right corner represents the percentage of the state that uses propane and fuel oil heating, thus, the percentage of the state that could expect these kinds of savings.

The information on this page is not intended as legal or tax advice for specific individuals or organizations or actual determination of eligibility for tax credits and/or deductions of any particular project or activity. Please visit the IRS website for more information on tax credits and deductions under the Inflation Reduction Act of 2022, and you may choose to consult with a tax advisor.

Some of the affordable clean energy plan’s most talked about benefits will save most car-buyers (depending on income) up to $7,500 on the purchase of a new electric vehicle (EV) and up to $4,000 on the purchase of a used electric vehicle. You can also reduce or get money back on your taxes for battery storage systems and dedicated EV chargers that will let you charge your electric vehicle up to 3 times faster than using a standard outlet.

For many people, the switch to electric vehicles has been hindered by no EV charging access or installation opportunities where they live, or unreasonable detours and intense trip planning for long trips or commutes. Fortunately, Congress provided $7 billion of funding for more charging stations nationwide. Through corridor and community charging grant programs, EV charging infrastructure will be available not only along busy highways, but also in places like public parking garages, multifamily buildings and grocery store parking lots, and public parks.

You may also be able to install an EV charger at your home using the tax incentives, petition your workplace to install faster chargers (called Level 2 or 3 fast chargers), and ask your landlord or housing association to provide charging for residents. (These tax incentives are also available for the first time to non-profit groups, Tribal and municipal governments, and other entities — see “Schools, Community Centers and Local Government”.

The information on this page is not intended as legal or tax advice for specific individuals or organizations or actual determination of eligibility for tax credits and/or deductions of any particular project or activity. Please visit the IRS website for more information on tax credits and deductions under the Inflation Reduction Act of 2022, and you may choose to consult with a tax advisor.

The Infrastructure Investment and Jobs Act provided up to $108 billion in much-needed support for public transportation systems across the country. First and foremost, the public transit provisions require that all new projects center investments and create jobs in disadvantaged communities. Specifically, projects that electrify and expand transit services in disadvantaged communities are prioritized for funding. The plan also includes funding for technical assistance and capacity building in under-resourced and disadvantaged communities communities.

These public transit investments also encourage municipalities to develop affordable housing near new transit facilities – this helps to ensure that communities that have been separated by highways and damaged by redlining (discriminatory practices that increase pollution in disadvantaged communities) can have access to safe, affordable transportation and housing options. In addition to connecting communities, the clean energy initiative provides funds for the development of commuter rail projects. This helps to reduce dependence on vehicles for those traveling to urban areas for work.

Support for public transit in the affordable clean energy plan goes beyond subways and buses – it focuses on micromobility, too. This is the idea that bikes, e-scooters, and pedestrian paths can help to supplement other forms of transportation. Fortunately, the recently enacted provisions of the infrastructure law include $7.2 billion in formula funds to develop micromobility options.

The information on this page is not intended as legal or tax advice for specific individuals or organizations or actual determination of eligibility for tax credits and/or deductions of any particular project or activity. Please visit the IRS website for more information on tax credits and deductions under the Inflation Reduction Act of 2022, and you may choose to consult with a tax advisor.

The U.S. Environmental Protection Agency’s (EPA) Clean School Bus Program launched last year and will distribute $5 billion over 5 years to replace polluting buses with electric school buses. Propane and compressed natural gas buses are also eligible for some support, but to maximize carbon pollution reduction and reduce student exposure to pollution, all-electric buses are best for communities and school children. The program prioritizes funding for low-income, rural, and Tribal school districts. EPA aims to distribute $1 billion each year through 2026 in the form of grants and rebates.

In 2022, EPA launched the first round of funding through rebates, awarding over $920 million to almost 400 school districts for nearly 2,500 new school buses, 95 percent of which are electric. Another rebate round is expected in fall/winter 2023. Starting in 2023, schools and municipal governments are also eligible for money back from the federal government for the purchase of electric school buses, up to $40,000 per bus, when they submit a form in advance and another form after the purchase. For more details, visit the White House’s guidance here.

The EPA 2023 grants round will continue to prioritize funding for school districts with 20% or more students living in poverty, as well as districts that are rural or Tribal. The grant program was a thorough and competitive process. Applicants have been asked to highlight their programmatic capability, such as a utility partnership plan, a proposed budget, plans to meet environmental goals, and the ability to leverage other sources of private or local funding. Grant funding can be used for a wider variety of expenses in comparison to the rebate round, and projects can also have a longer length. Grant and rebate funding will be available during a specific application window each year through 2026. For more information on clean school bus grants, visit the EPA’s site here.

The information on this page is not intended as legal or tax advice for specific individuals or organizations or actual determination of eligibility for tax credits and/or deductions of any particular project or activity. Please visit the IRS website for more information on tax credits and deductions under the Inflation Reduction Act of 2022, and you may choose to consult with a tax advisor.

Schools are the heart of many communities across the U.S. They are also major consumers of electricity and gas. For many local governments, schools represent one of their larger, if not the largest, budgetary investments. For the first time, school districts will be able to tap into clean energy tax incentives through new direct pay opportunities, as well as other new or expanded grant and loan programs, from the federal clean energy plan. Transitioning school buildings and buses to clean energy will enable school districts to save money that they can reinvest in students and classrooms. Many school districts around the country are already embracing this transition. The affordable clean energy plan will expand this exciting trend.

School Buildings

Children ages 5 through 18 in the U.S. spend a large proportion of their waking hours in school buildings. The affordable clean energy plan provides a lot of new grant support and, for the first time, provides tax incentives to enable school districts to scale renewable energy–including solar and geothermal–to power their buildings and to expand energy efficiency. Cutting the use of fossil fuels to power our nation’s schools through investments in rooftop solar, heat pumps, battery storage and more teaches students about these essential climate solutions in a tangible, hands-on way.

• Energy Efficiency Upgrades – Tax deduction of up to $5 per square foot (179D)
  • A tax deduction — which reduces taxable income rather than the taxes owed directly — for large-scale retrofits that verifiably improve a school’s energy efficiency by installing air source heat pumps, LED lighting, heat pump water heaters, and more.
    • These deductions range from $0.50 to $5.00 per square foot of floor area.
    • The total deduction amount depends on the percentage of energy savings and whether prevailing wages are paid by the contractor.
      
    • Retrofits that reduce energy usage by at least 25% may receive up to $5/square foot.
  • These deductions can be transferred from non-taxable entities to retrofit engineers/architects/designers.
• A school can qualify for this deduction every three years if it’s completed at least one qualifying energy-efficient system renovation.
• Available 2023-2032.
• For more details, see IRS guidance relating to the deduction for energy efficient commercial buildings under § 179D here.
• Clean Energy – Tax credit up to $33 per MWh (45)
  • The Production Tax Credit (PTC), a tax credit for clean energy production like solar energy, is now available to schools through direct payments.
  • The dollar amount of tax credits depends on the amount of energy produced by the facility.
    • A school that installs solar is eligible to receive $27.50 per MWh produced, adjusted for inflation, for the first 10 years of production.
    • A school must file annually for the credit (more info available in the IRS PDF above).
  • There are bonuses available for projects located in energy communities or utilizing American-made products.
  • Cannot be claimed in conjunction with the Investment Tax Credit.
  • This credit is available at least through 2033 and will begin to ramp down after that.
• Clean Energy Investment Tax Credit up to 70% of installation costs (48)
  • The Investment Tax Credit (ITC) offers a 30% tax credit off the qualified costs of renewable energy products and is now available to schools under direct pay.
  • Eligible projects include solar PV, geothermal heating, battery storage, and more.
  • Bonus credits are available for projects using American-made products or serving low-income and underserved communities or energy communities, potentially increasing the value of the credit to 70% of the eligible installation costs.
  • Cannot be claimed in conjunction with the Production Tax Credit.
  • This credit is available at least through 2033 and will begin to ramp down after that.

School Buses and Related Infrastructure

Diesel school buses pollute neighborhoods’ air and the lungs of millions of school children riding to and from school, affecting their attendance and school performance. And diesel and engine maintenance pose significant costs to school districts and school bus operators. The federal clean energy plan provides a variety of new and expanded tax incentives and grants to local and Tribal governments that encourage the transition to zero emissions school buses. This will help improve air quality for students riding buses, and enable schools to reap the financial benefits of electric school buses, which are cheaper to operate. Electric school buses can also be integrated into local grids to assist utilities in providing energy storage and quick response electricity capacity when the buses are not being used to transport students.

• Commercial Clean Vehicle – Tax Credit up to 30% (45W)
  • A 30% tax credit on the incremental cost of commercial electric vehicles (or 15% for qualifying plug-in hybrid) placed in service before 2033 (available through direct pay to municipalities and school districts).
  • There is a per-vehicle limit of $7,500 for vehicles with a gross weight of fewer than 14,000 pounds (e.g. food service, maintenance, or other district-owned vehicles) and a $40,000 limit for vehicles at or above that weight (e.g. electric school buses).
  • See the IRS website’s Commercial Clean Vehicle Credit page for more information.
• EV and Electric School Bus Charging Infrastructure – Property Credit up to 30% (30C)
  • A 30% property credit dedicated to low-income or rural areas toward the total purchase and installation of EV charging equipment—up to $100,000 per charging facility.
    • Eligible for direct pay.
    • Includes bi-directional chargers.
  • Clean Heavy-Duty Vehicle – Grant and Rebate Program
    • A competitive grant or rebate program to replace dirty heavy-duty vehicles with zero-emission vehicles (ZEV), support ZEV infrastructure, and train workers.
    • $1 billion from the Environmental Protection Agency (EPA) to states, local governments, Tribes, non-profit school transportation associations, and eligible contractors.
      • $400 million allocated toward areas with poor air quality.
    • See the EPA website’s Clean Heavy-Duty Vehicle Program page for more information.
  • EPA Clean School Bus – Rebates and Grants
    • Rebates and grants are available from 2022-2026 to replace existing school buses with zero-emission and low-emission models.
      • The 2023 Clean School Bus Program Grants program is open through August 22, 2023; the 2023 rebate program is still to come.
    • $5 billion from the EPA to state and local governmental entities that provide bus service (including school districts), eligible contractors, nonprofit school transportation associations, and Tribes responsible for the purchase of school buses or providing school bus services. More details on eligibility for the Clean School Bus Program are available here.

The information on this page is not intended as legal or tax advice for specific individuals or organizations or actual determination of eligibility for tax credits and/or deductions of any particular project or activity. Please visit the IRS website for more information on tax credits and deductions under the Inflation Reduction Act of 2022, and you may choose to consult with a tax advisor.

State and local governments will play an integral role in ensuring projects to expand access to clean renewable energy take root and deliver cost savings and air pollution reductions to those who most need the help (see the IRS’s overview of state and local government elective pay options in this PDF).

Not only do local governments have the opportunity to directly receive funding to create renewable energy projects for their residents through initiatives like community solar, but they also have the opportunity to receive grant awards for establishing new, efficient building codes to reduce carbon emissions in new construction projects, and to receive funding for air pollution monitoring systems. Municipalities are also going to have the chance to apply for funding to transition to renewable energy and create the much-needed electrical vehicle charging infrastructure we will need as we shift to zero tailpipe emissions cars and trucks.

• Greenhouse Gas Reduction Fund
  • Solar for All competition
    • A $7 billion competitive grant funding opportunity run by EPA for up to 60 recipients including states, Tribal governments, municipalities, and nonprofits.
    • Aims to expand access to residential and community solar.
    • See more information on the Greenhouse Gas Reduction Fund here.
• Technical Assistance for the Adoption of Building Energy Codes
  • Funds to adopt, implement, and enforce the latest model, zero energy codes, or equivalent codes and standards. Technical Assistance for the Adoption of Building Energy Codes is available here.
  • $1 billion from the Department of Energy to state and local governments.
• Charging and Refueling Infrastructure Grant Program
  • This program invests in deploying more charging and refueling infrastructure along “Alternative Fuel Corridors.”
  • $2.5 billion from the Department of Transportation to states and local governments, metropolitan planning organizations, and other public-sector entities. Includes a set-aside for Community Grants.
• Clean Heavy-Duty Vehicle – Grant and Rebate Program
  • This is a competitive grant or rebate program to replace dirty heavy-duty vehicles with zero-emission vehicles (ZEV), support ZEV infrastructure, and train workers.
  • $1 billion from the EPA to state and local governments, Tribes, non-profit school transportation associations, and eligible contractors.
    • $400 million of which is allocated towards areas with poor air quality.
  • See the EPA website for more information on the Clean Heavy Duty Vehicle Program.
• Qualified Commercial Clean Vehicle – Tax Credit up to $40,000 per bus, available as direct payments to local governments (45W)
  • This section offers a 30% tax credit on the incremental cost of electric (or 15% for qualified plug-in hybrid) commercial clean vehicles placed in service before 2033 (available through direct pay to municipal governments).
  • There is a per-vehicle limit of $7,500 for vehicles with a gross weight of fewer than 14,000 pounds (e.g. food service, maintenance, or other fleet vehicles) and a $40,000 for vehicles at or above that weight (e.g. buses, garbage trucks).
  • See the IRS website for more information on the Commercial Clean Vehicle Credit.
• EV Charging – Tax Credit of up to $100,000 per charging facility, available as direct payments to local governments (30C)
  • The EV Charging Tax Credit provides a 30% tax credit (up to $100,000 per charging facility) for electric vehicle charging installed in low-income or rural census tracts.
  • Nonprofits and other non-taxable entities can claim the credit via direct pay.
  • Available now through 2032.
• Environmental and Climate Justice Block Grants
  • $3 billion in total funding – $2.8 billion for financial assistance and $200 million for technical assistance from EPA.
• Climate Pollution Reduction Grants
  • These grants will help states and local governments plan and implement programs, policies, measures, and projects that will achieve or facilitate the reduction of climate pollution.
  • $5 billion from the EPA to states, Tribes, air pollution control agencies, and municipalities. See more information on how the affordable clean energy plan advances environmental justice here.
  • $250 million toward the development of plans and grants for one entity in each state and a number of metropolitan statistical areas.
  • $4.75 billion competitively awarded for implementation.
  • Climate Pollution Reduction Planning Grants awarded to state and local governments expected July or August 2023.
• Clean Energy Investment Tax Credit, available as direct payments to municipalities
  • The Investment Tax Credit (ITC, Section 48 or 48E) provides a 30% tax credit (uncapped) on the cost of installing solar, geothermal, energy storage, and more.
    • Can be used for utility-scale projects like a municipal-owned community solar development or building-scale projects like rooftop solar on institutional buildings.
      • Utility-scale projects must meet labor requirements to claim the full 30% credit.
    • Additional bonuses for projects that use domestic content and projects in legacy energy communities or in low-income communities.
  • Credit can be claimed directly by non-taxable entities, see IRS guidance for more details on Elective Pay transferability.
• Clean Electricity Production Tax Credit – up to $33 per MWh
  • The Production Tax Credit (PTC, Section 45 or 45Y) is for the first 10 years of renewable energy generation for utility-scale or distributed (e.g. rooftop solar) projects.
  • Eligible technologies include geothermal electric, solar, wind, hydroelectric, offshore wind, and more.
  • For projects < 1MW or meeting labor requirements, the credit is $27.50/MW, inflation-adjusted.
    • The base credit of $5.50/MW is multiplied by 5 for projects meeting prevailing wage and registered apprenticeship requirements.
  • Credit is increased by 10% if the project meets certain domestic content requirements for steel, iron, and manufactured products.
  • Credit is increased by 10% if located in an energy community.
  • Cannot be claimed in conjunction with the Investment Tax Credit.
  • This credit is available at least through 2033 and will begin to ramp down after that.
• Energy Efficiency Upgrades – Tax deduction of up to $5 per square foot (179D)
  • The Commercial Buildings Deduction (179D) allows building owners to receive a tax deduction for installing approved efficient systems for interior lighting, HVAC and hot water systems, or building envelopes.
    • Deductions range from $0.50 to $5.00 per square foot of floor area. The deduction amount depends on the percentage of energy savings and whether prevailing wages are paid by the contractor.
      • Tax deduction for retrofits that reduce energy usage or costs by at least 25%, up to $5/square foot.⁷Tax Deductions are an amount that one can subtract from their taxable income to lower the amount of taxes owed.
    • The deduction can be transferred from non-taxable entities to retrofit engineers/architects/designers.
  • Available 2023-2032.
  • See IRS guidance relating to the deduction for energy efficient commercial buildings under § 179D here.
• Air Pollution Monitoring and Screening Grants
  • These grants invest in a range of activities that will increase air monitoring in and by communities.
  • $280 million from the EPA to states, local, and Tribal governments.
  • Closing date varies.
• Grants to Reduce Air Pollution at Ports
  • These grants invest $3 billion in competitive rebates and grants to reduce pollution and increase the resiliency of ports.
  • Eligible recipients include port authorities, state, regional, local, or Tribal agencies with jurisdiction over a port authority or port, air pollution control agencies, or private entities that apply in partnership with an eligible entity and own, operate, or use port facilities.
    • $750 million of total funding to be spent in nonattainment areas.
  • Funding available until September 30, 2027.
• Green and Resilient Retrofit Program
  • This grant and loan program allows affordable apartments to improve energy and water efficiency, reduce climate and air pollution, and increase their resilience.
    • Solar power, energy storage, building electrification, energy benchmarking, and technical assistance.
  • $1 billion in funding to provide grants and loans — can originate up to $4 billion in loans — for property owners receiving certain types of HUD rental assistance.
  • The notice of funding for the Green and Resilient Retrofit Program (PDF) and funding guidance on the Green and Resilient Retrofit Program (PDF) were posted in May 2023.

The information on this page is not intended as legal or tax advice for specific individuals or organizations or actual determination of eligibility for tax credits and/or deductions of any particular project or activity. Please visit the IRS website for more information on tax credits and deductions under the Inflation Reduction Act of 2022, and you may choose to consult with a tax advisor.

Non-profit organizations are the lifeblood of many communities across the country and provide needed services. Some of these nonprofits build affordable housing, provide transportation for senior citizens, or assist with job training and placement. Thanks to the provisions in the affordable clean energy plan, for the first time, these non-profit organizations will be eligible (PDF) to receive tax credits as direct payments (PDF), known as elective or direct pay, so they can better afford to take on needed projects and perhaps even expand or enhance their services. Non-profit groups that build affordable homes can now receive money back for adding solar panels and heat pumps to those homes. Faith-based institutions delivering food to the elderly or homeless can now get money back if they purchase electric vehicles to deliver those meals. By allowing non-profits to apply for grant programs and receive the tax credits as direct payments (information on eligibility and more here), they will be able to not only expand their programs but also multiply their effectiveness, all while decreasing overall costs to run their programs while combating climate change and reducing air pollution.

• Greenhouse Gas Reduction Fund
  • National Clean Investment Fund
    • $14 billion in competitive grant funding for 2-3 national nonprofits partnering with private capital providers.
    • The goal is to catalyze tens of thousands of clean technology projects with loans or grants and accelerate progress toward energy independence and net zero carbon pollution.
  • Clean Communities Investment Accelerator
    • $6 billion in competitive grant funding for 2-7 hub nonprofits to finance clean technology projects and pollution-reducing initiatives.
  • More information is available here.
• Clean Electricity Investment Tax Credit, available as direct payments to non-profits
  • The Investment Tax Credit (Section 48 or 48E) allows a 30% tax credit (uncapped) for solar, geothermal, energy storage, and more.
    • Can be used for utility-scale projects like a municipal-owned community solar development or building-scale projects like rooftop solar on institutional buildings.
    • Bonuses for projects that use domestic content, projects in legacy energy communities, and projects in low-income communities.
  • Credit can be claimed directly by non-taxable entities.
  • Full credit available until at least 2033, with a phase-down to follow.
• Clean Energy Production Tax Credit – up to $33 per MWh (45)
  • The Production Tax Credit (PTC, Section 45 or 45Y) provides a tax credit based on the amount of energy produced for the first 10 years of renewable energy generation at utility-scale or distributed (e.g. rooftop solar) projects.
  • Eligible technologies include geothermal electric, solar, wind, hydroelectric, offshore wind, and more.
  • For projects < 1MW or meeting labor requirements, the credit is $27.50/MW, inflation-adjusted.
    • The base credit of $5.50/MW is multiplied by 5 for projects meeting prevailing wage and registered apprenticeship requirements.
  • Credit is increased by 10% if the project meets certain domestic content requirements for steel, iron, and manufactured products.
  • Credit is increased by 10% if located in an energy community.
  • Cannot be claimed in conjunction with the Investment Tax Credit.
  • This credit is available at least through 2033 and will begin to ramp down after that.
• EV Charging – Tax Credit of up to $100,000, available as direct payments to non-profits (30C)
  • The EV Charging Tax Credit in Section 30C allows a 30% tax credit (up to $100,000 per charging facility) for electric vehicle charging installed in low-income or rural census tracts.
  • Nonprofits and other non-taxable entities can claim the credit via direct pay.
  • Available through 2032.
• Environmental and Climate Justice Block Grants
  • Funds for community-led efforts in pollution monitoring, prevention, remediation, and more.
  • $3 billion from the Environmental Protection Agency to eligible recipients including:
    • A Tribal government, local government, OR higher education institution in partnership with a community-based nonprofit
    • Community-based nonprofit organization
    • A partnership of community-based nonprofit organizations
  • Grants are awarded for periods of up to 3 years to eligible entities to carry out activities that benefit communities that meet the definition of disadvantaged communities.
  • The first of several grants was awarded in early 2023. More funding is available, but dates of future rounds of funding have yet to be determined.
• Energy Efficiency Upgrades – Tax deduction of up to $5 per square foot (179D)
  • The Commercial Buildings Deduction (Section 179D) allows building owners to get a tax deduction — which reduces taxable income rather than the taxes owed directly — for installing approved efficient systems for interior lighting, HVAC and hot water systems, or building envelopes.
    • Deductions range from $0.50 to $5.00 per square foot of floor area. The deduction amount depends on the percentage of energy savings and whether prevailing wages are paid by the contractor.
      • Tax deduction for retrofits that reduce energy usage or costs by at least 25%, up to $5/square foot.
    • The deduction can be transferred from non-taxable entities to retrofit engineers/architects/designers.
  • Available 2023-2032.
  • See IRS guidance relating to the deduction for energy efficient commercial buildings under § 179D here..
• Commercial Clean Vehicle – Tax Credit up to $40,000 per bus, available as direct payments to non-profits (45W)
  • A 30% tax credit on the incremental cost of commercial electric vehicles (or 15% for qualified plug-in hybrid) placed in service before 2033 (available through direct pay to nonprofits).
  • There is a per-vehicle limit of $7,500 for vehicles with a gross weight of fewer than 14,000 pounds (e.g. food service or maintenance vehicles) and a $40,000 limit for vehicles at or above that weight (e.g. buses).
  • See the IRS website’s Commercial Clean Vehicle Credit page for more information.

The information on this page is not intended as legal or tax advice for specific individuals or organizations or actual determination of eligibility for tax credits and/or deductions of any particular project or activity. Please visit the IRS website for more information on tax credits and deductions under the Inflation Reduction Act of 2022, and you may choose to consult with a tax advisor.

Energy Efficiency Upgrades – Tax Deduction of up to $5 per square foot (179D)

• The Energy Efficient Commercial Buildings tax deduction (Section 179D) allows building owners to get a tax deduction — which reduces taxable income rather than the taxes owed directly — for installing approved efficient systems for interior lighting, HVAC and hot water systems, or building envelopes.
  • Deductions range from $0.50 to $5.00 per square foot of floor area. The deduction amount depends on the percentage of energy savings and whether prevailing wages are paid by the contractor.
    • Tax deduction for retrofits that reduce energy usage or costs by at least 25%, up to $5/square foot.
  • The deduction can be transferred from non-taxable entities to retrofit engineers/architects/designers.
  • Enhanced credit available 2023-2032.

The information on this page is not intended as legal or tax advice for specific individuals or organizations or actual determination of eligibility for tax credits and/or deductions of any particular project or activity. Please visit the IRS website for more information on tax credits and deductions under the Inflation Reduction Act of 2022, and you may choose to consult with a tax advisor.

Commercial Clean Vehicles – Tax Credit up to $40,000 for a large vehicle (45W)

• Up to 30% tax credit on the incremental cost of electric commercial vehicles placed in service before 2033.
• There is a per-vehicle limit of $7,500 for vehicles with a gross weight of fewer than 14,000 pounds (e.g. delivery vans or other fleet vehicles) and a $40,000 limit for vehicles at or above that weight (e.g. garbage trucks, buses).
  • No manufacturing requirements.
  • See the IRS website for more information on the Commercial Clean Vehicle Credit.

The information on this page is not intended as legal or tax advice for specific individuals or organizations or actual determination of eligibility for tax credits and/or deductions of any particular project or activity. Please visit the IRS website for more information on tax credits and deductions under the Inflation Reduction Act of 2022, and you may choose to consult with a tax advisor.

Clean Electricity Investment Tax Credit – up to 70% of installation costs (48)

• The Investment Tax Credit (Section 48) provides a 30% uncapped tax credit, with certain requirements, for the cost of installing solar, small wind, geothermal, energy storage, and more.
  • Can be used for utility-scale projects or building-scale projects (like rooftop solar on commercial buildings)
    • Utility-scale projects must meet certain labor requirements to claim the full credit.
  • Additional bonuses for projects that use domestic content (+10%) and projects in legacy energy communities (+10%) or in low-income communities (+10% or +20%, limited availability and must apply for an allocation) potentially increasing the value of the credit to 70% of the eligible installation costs.
  • These credits will be applicable to projects that start construction before 2025.
    • After 2025, new clean electricity investment tax credits (48E) will be available through at least 2033, with a structure similar to the credits described above, pending guidance from the IRS.

The information on this page is not intended as legal or tax advice for specific individuals or organizations or actual determination of eligibility for tax credits and/or deductions of any particular project or activity. Please visit the IRS website for more information on tax credits and deductions under the Inflation Reduction Act of 2022, and you may choose to consult with a tax advisor.

Clean Energy Production Tax Credit – up to $33 per MWh (45)

• The Production Tax Credit (Section 45) is available as a corporate tax credit for facilities generating renewable energy, beginning construction before January 1, 2025.
• Eligible technologies include geothermal electric, solar, wind, hydroelectric, offshore wind, and more.
• For projects < 1MW or meeting labor requirements, the credit is $27.50/MW, inflation-adjusted.
  • The base credit of $5.50/MW is multiplied by 5 for projects meeting prevailing wage and registered apprenticeship requirements.
• Credit is increased by 10% if the project meets certain domestic content requirements for steel, iron, and manufactured products.
• Credit is increased by 10% if located in an energy community.
• These credits will be applicable to projects that start construction before 2025.
  • After 2025, new clean electricity production tax credits (45Y) will be available through at least 2033, with a structure similar to the credits described above, pending guidance from the IRS.

The information on this page is not intended as legal or tax advice for specific individuals or organizations or actual determination of eligibility for tax credits and/or deductions of any particular project or activity. Please visit the IRS website for more information on tax credits and deductions under the Inflation Reduction Act of 2022, and you may choose to consult with a tax advisor.

Rural Energy for America Program (REAP) – Loans and grants for renewable energy and energy efficiency

• The REAP program provides guaranteed loan financing and grant funding to agricultural producers and rural small businesses.
• Funds may be used for solar, wind, hydro, geothermal, or biomass renewable energy systems, or for energy efficiency improvements including HVAC, insulation, lighting, and replacing energy-inefficient equipment including sprinkler and irrigation systems.
• Loan guarantees on loans up to 75% of the total eligible project costs, or grants for up to 50% of project costs.⁸Grants and loan guarantees can also be combined to provide funding up to 75% of total eligible project costs.
• Grants can range from $2,500 to $1 million for Renewable Energy Systems, or from $1,500 to $500,000 for Energy Efficiency grants.

The information on this page is not intended as legal or tax advice for specific individuals or organizations or actual determination of eligibility for tax credits and/or deductions of any particular project or activity. Please visit the IRS website for more information on tax credits and deductions under the Inflation Reduction Act of 2022, and you may choose to consult with a tax advisor.

Electric Vehicle (EV) Charging – Tax Credit of up to $100,000 per charging facility (30C)

• The EV Charging Tax Credit (Section 30C) provides a 30% tax credit (up to $100,000 per charging facility) for electric vehicle charging installed in low-income or rural census tracts.
• Available through 2032.

The information on this page is not intended as legal or tax advice for specific individuals or organizations or actual determination of eligibility for tax credits and/or deductions of any particular project or activity. Please visit the IRS website for more information on tax credits and deductions under the Inflation Reduction Act of 2022, and you may choose to consult with a tax advisor.

Advanced Energy Projects – Capped Tax Credit (48C)

• Section 48C provides $10 billion in tax credits to cover up to 30% of the costs for investments in advanced energy projects that:
  • Re-equips, expands, or establishes an industrial or manufacturing facility for the production or recycling of a range of clean energy equipment and vehicles;
  • Re-equips an industrial or manufacturing facility with equipment designed to reduce greenhouse gas emissions by at least 20 percent; or
  • Re-equips, expands, or establishes an industrial facility for the processing, refining, or recycling of critical materials.
• Unlike most of the other tax credits, 48C is capped and must be applied for on a competitive basis.
• At least $4 billion must be allocated to projects located in Energy Communities Census Tracts.
• Further guidance on  the Qualifying Advanced Energy Project Credit Allocation Program is available here as a PDF and as well as Energy.gov’s Qualifying Advanced Energy Project Credit page here.

The information on this page is not intended as legal or tax advice for specific individuals or organizations or actual determination of eligibility for tax credits and/or deductions of any particular project or activity. Please visit the IRS website for more information on tax credits and deductions under the Inflation Reduction Act of 2022, and you may choose to consult with a tax advisor.

• The Department of Energy’s Loan Programs Office (LPO) runs the Innovative Energy and Innovative Supply Chain (Section 1703) loan program, which is funded at $3.6 billion through FY2026, with authority to guarantee up to $40 billion of loans.
• Loan guarantees for projects that avoid, reduce, or sequester air pollutants or anthropogenic greenhouse gas emissions.
• While LPO generally only works with higher loan amounts, they can support a variety of project types:
  • LPO can finance “innovative” projects like virtual power plants.
  • If state entities supplement LPO funding, the “innovative” requirement can be waived, allowing LPO to help fund standard clean energy deployment.
  • LPO can provide subsidized loans for onshoring of domestic manufacturing facilities.

The information on this page is not intended as legal or tax advice for specific individuals or organizations or actual determination of eligibility for tax credits and/or deductions of any particular project or activity. Please visit the IRS website for more information on tax credits and deductions under the Inflation Reduction Act of 2022, and you may choose to consult with a tax advisor.

• LPO’s Energy Infrastructure Reinvestment program (Section 1706) creates a loan guarantee program for projects that involve modifying or replacing inactive energy infrastructure to reduce toxic and carbon pollution.
  • The clean energy plan provided this program with $5 billion (through FY 2026) for the Department of Energy to support loan guarantees of up to $250 billion. The loan amount cannot exceed 80% of eligible project costs.
• Financing for projects that retool, repower, repurpose, or replace energy infrastructure that has ceased operations or enable operating energy infrastructure to avoid, reduce, utilize, or sequester air pollutants or carbon pollution.
• Available for commitment through September 30, 2026.
• See more information on the Loan Programs Office website here.
• Sign-up for a no-cost, pre-application consultation here.

The information on this page is not intended as legal or tax advice for specific individuals or organizations or actual determination of eligibility for tax credits and/or deductions of any particular project or activity. Please visit the IRS website for more information on tax credits and deductions under the Inflation Reduction Act of 2022, and you may choose to consult with a tax advisor.

• The Advanced Manufacturing Production Tax Credit (Section 45X) provides domestic manufacturers of solar, wind, battery components, and some critical minerals with certain credits, dependent on the components they create.
• It will phase out in 2030-2032.
• It cannot be combined with 48C.

The information on this page is not intended as legal or tax advice for specific individuals or organizations or actual determination of eligibility for tax credits and/or deductions of any particular project or activity. Please visit the IRS website for more information on tax credits and deductions under the Inflation Reduction Act of 2022, and you may choose to consult with a tax advisor.

If you’re a homeowner or a renter and would like to better understand how your household can benefit from the Inflation Reduction Act, Rewiring America has an IRA Savings Calculator that can determine what, and how much, you’re eligible to save.

For additional information, see the Electrify Everything in Your Home Guide. In each chapter, you’ll find information about the different choices you have for your electric appliance, tips on getting started, questions you can ask contractors, suggestions for running the appliance efficiently, and links to find more helpful details.

Rewiring America’s Go Electric Guide includes everything you need to know about IRA incentives and electric equipment. It also offers a checklist to help you build your own electrification plan and case studies so you can see what happens when a household like yours decides to tap into these incentives.

The information on this page is not intended as legal or tax advice for specific individuals or organizations or actual determination of eligibility for tax credits and/or deductions of any particular project or activity. Please visit the IRS website for more information on tax credits and deductions under the Inflation Reduction Act of 2022, and you may choose to consult with a tax advisor.

If you’re interested in exploring how your community could benefit from the Justice40 program (a federal initiative to ensure that at least 40% of the overall benefits of overall investments in IRA and other programs are directed to disadvantaged communities), reach out to your state and local elected officials and state agencies to ask about their plans to apply for or implement Justice40 program funding and to urge them to use the funds in ways that maximize benefits to communities. The affordable clean energy plan presents an unprecedented opportunity to expand clean energy and transportation in all of our communities.

The information on this page is not intended as legal or tax advice for specific individuals or organizations or actual determination of eligibility for tax credits and/or deductions of any particular project or activity. Please visit the IRS website for more information on tax credits and deductions under the Inflation Reduction Act of 2022, and you may choose to consult with a tax advisor.

The climate and clean energy investments in the Inflation Reduction Act and the Infrastructure Investment and Jobs Act are already helping cut carbon pollution, create local jobs, and expand environmental justice. If you’re interested to learn about investments that are already happening in your community or state, you can visit the interactive map at Invest.gov to view ongoing projects funded by the affordable clean energy plan (the clean energy and climate investments in IRA and IIJA). It also highlights private sector investments that are leveraging other federal investments to create jobs and manufacture the components of the future here in the USA.

The information on this page is not intended as legal or tax advice for specific individuals or organizations or actual determination of eligibility for tax credits and/or deductions of any particular project or activity. Please visit the IRS website for more information on tax credits and deductions under the Inflation Reduction Act of 2022, and you may choose to consult with a tax advisor.