The Inflation Reduction Act was one of President Joe Biden’s great accomplishments and an opportunity for real progress on climate change, and President-elect Donald Trump wants to get rid of it.
“I will rescind all the unspent funds under the misnamed Inflation Reduction Act,” Trump said in a speech before the Economic Club of New York in September. He called it “the new green scam.”
What’s going to happen to the IRA’s clean energy electricity incentives that are helping so many households?
The IRA was intended to incentivize you to decarbonize your home. It is full of rebates and tax incentives to help homeowners, renters and landlords make money-saving greener choices. The full implementation of the IRA could result in reducing as much as 42% of the U.S. energy emissions.
You may have heard this before, but it’s worth repeating: New Mexico got some $87 million for the rebate program. In our state, those funds primarily go to low-income families to help them decarbonize their homes.
These programs are just starting to roll out and since the funds are authorized and in place, they cannot easily be cut. The rebates include up to $8,000 for heat pumps, up to $4,000 to upgrade your electrical panel, up to $1,750 for a heat pump water heater, up to $2,500 for new wiring, $1,600 for insulation and up to $840 for a new electric stove. To find what you would qualify for, go to: https://clean.energy.nm.gov/
Trump has made it clear that the IRA tax credits are on the chopping block. The new administration is proposing cutting not just electric vehicle tax credits but other IRA federal tax credits to pay for tax cuts to the wealthy. You can presently get tax credits of $7,500 for a new EV, $4,000 for used EV, $2,000 for heat pumps, and a 30% credit for rooftop solar. Those tax credits may not be available this year. For more information see: https://350newmexico.org/inflation-reduction-act/
Making major changes to existing legislation requires congressional action. Trump could eliminate or revise the IRA through the reconciliation process, which only requires a majority vote. The Department of Treasury could also promulgate rule changes in tax incentives, and the new treasury head nominee is no fan of the IRA.
Of course, the IRA is far more than rebates and tax credits, it is jump-starting clean manufacturing throughout the county and includes many job-producing programs and new factories in red states.
Scott Patterson, writing for the Wall Street Journal recently, said, “The cold reality is that too many Republicans want to keep it. The IRA has channeled billions of dollars of renewable energy projects across the country with Republican states getting the lion’s share of the funding.”
“There are too many things in there that are too important to many constituencies to throw out the law,” added Sen. Kevin Cramer, a North Dakota Republican.
While we simply don’t know what’s going to happen, it is likely the tax credits will disappear.
If you haven’t already had an energy audit for your home, you should start there. And go to https://www.rewiringamerica.org/ and use their IRA calculator on their website. It will tell you how much savings you can get from these rebates and tax incentives. You just put in your family income, the number of people who live with you, and where you live, and it will calculate how much you have in your energy account. Remember, in our state the rebates are only available to low-income households.
And the tax credits are different from the rebates, you must file taxes to get the tax credits.
Maybe you’ve been thinking of getting an EV. There is still a $7,500 tax credit available for many new EVs and a $4,000 credit for used EVs, but no one knows how long those tax credits will be available. Use the tax incentives available now, because they just might not be there in another year or two.
There’s no question that the Inflation Reduction Act, if fully implemented, would change the trajectory of climate change. It would also help millions of householders, landlords and renters. It was expected to result in about 2.5 million electrical upgrades on existing homes and the installation of over 7 million heat pumps. That alone, according to Princeton University forecasts, would lead to a reduction of some 360 million metric tons of emissions by 2030. Obviously, the elimination of those tax incentives will make it much harder to meet that goal.
Act now while they are still available.
Published on January 6, 2025, in the Albuquerque Journal.
© Judith Polich. All Rights Reserved. May be republished with author’s written consent and proper attribution.