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How the New Climate Law Can Save You Thousands of Dollars
https://www.nytimes.com/2022/09/13/climate/climate-law-tax-credits.html
Rebates and tax credits can lower the cost of solar panels, energy-efficient appliances and electric vehicles.
Coral Davenport
By Coral Davenport
Sept. 13, 2022
The Inflation Reduction Act signed into law by President Biden in August includes about $370 billion to fight climate change, some of it in the form of tax credits and rebates to help consumers save thousands of dollars on energy-efficient appliances, plug-in vehicles and renewable electricity for their homes.
But taking advantage of those savings will require patience and initiative.
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The Biden administration has created a website designed to help you figure out which cars, appliances and home improvements will qualify for the tax credits and rebates. The answers are not yet clear in many cases because the programs are so new or the requirements of the law so stringent. White House officials say the website will be frequently updated as details take shape, and they advise consumers to subscribe to receive emailed updates.
Here’s what we know so far about how to use the new law to save money. One thing all the benefits have in common: Each one runs through at least 2032.
Home Energy Efficiency Improvements
The new law extends through 2032 an existing program that allows homeowners to claim a credit on their federal tax returns of 30 percent off improvements to home energy efficiency, such as windows and insulation. Buyers can claim up to $600 per purchase for up to $1,200 a year. To qualify for the tax credits, the items should have the Energy Star Most Efficient certification. Homeowners can also claim a $150 tax credit for a home energy audit.
Home Renewable Energy Installations
Homeowners can continue to claim a federal tax credit of 30 percent off renewable energy investments, such as rooftop solar panels or geothermal heat pumps. They can also claim a new credit for batteries intended to store electricity from renewable sources. There is no cap on the amounts that can be claimed. In 2033, the credit drops to 26 percent of the total purchase price, and in 2034 it drops to 22 percent before being phased out the year after.
Rebates on Energy-Efficient Appliances
The law establishes new rebates for the purchase and installation of energy-efficient appliances, including air-conditioners, dryers and electric induction stoves.
The rebate programs will be run by the states, and the amount you can receive will depend on how your income compares with the median level in your state.
If you earn up to 80 percent of your state’s median income, you can get back 100 percent of the cost of your energy-saving appliance or home improvement through the rebate program. If you make 80 to 150 percent of your state’s median income, you can get back 50 percent of the cost, maxing out at $8,000.
To receive the rebate, you will probably have to document your income and the cost of the appliance with your state. How soon this program is in place and how smoothly it works will most likely vary by state. White House officials say they hope that the federal website will direct consumers to state rebate programs as they become available.
Heat Pumps
The authors of the new law hope it will push Americans toward using electric heat pumps — one of the most energy-efficient ways to heat and cool homes. Consumers can use a new federal tax credit to get up to $2,000 for the purchase and installation of a heat pump, while those who meet the income qualifications for their state rebate program could get up to $8,000.
The law also includes a rebate of up to $4,000 for upgrading your home’s electricity system to install heat pumps or other energy-efficient electric appliances.
As with the other rebates for home appliances, the heat pump rebates will be made available through the states.
New Electric Vehicles
The law extends an existing program that gives buyers of new electric vehicles a tax credit of up to $7,500 if the vehicle was assembled in North America, but it adds new requirements on income and assembly location.
Under the current program, which expires at the end of 2022, automakers that have sold more than 200,000 electric vehicles this year will not qualify for the electric vehicle credit — so buyers of cars made by General Motors, Toyota and Tesla would not be eligible for the credit. But motorists can still receive a tax credit for some electric vehicles made by Ford, Honda and Subaru. The I.R.S. has a complete list of which cars qualify for the credit and for how much.
Starting in 2023, cars made by G.M., Toyota and Tesla will once again be eligible for the credits. But several new income requirements will kick in. The credits will be available only to individuals making less than $150,000, single heads of households making less than $225,000 and married couples with a joint income of less than $300,000. They can be used only for sedans priced below $55,000 or trucks, vans and S.U.V.s priced below $80,000.
Also starting in 2023, the credits will depend on how much of the vehicle was assembled in the United States. You can receive a $3,750 credit for an electric vehicle that was assembled in and had its battery components made in North America. You can receive another $3,750 if the minerals used in the battery were mined in countries with which the United States has free trade agreements.
After 2024, the credit will only apply to batteries with no components made in China, Russia, North Korea or Japan. After 2025, the credit will not apply if even one mineral used in the battery was mined or processed in one of those four countries.
The provision is designed to compel automakers to move their electric vehicle supply chains from other countries, particularly China, to the United States.
Used Electric Vehicles
For the first time, buyers of used electric vehicles will also qualify for a tax credit, equal to 30 percent of the total cost of the vehicle and capped at $4,000. The credit will only apply to cars that cost less than $25,000, and total credits are capped at $75,000 for individuals, $112,500 for single heads of households and $150,000 for married couples.
The used car must be purchased through a dealer, but there are no made-in-America or content requirements.
In 2022 and 2023, you can claim the tax credit on new electric vehicles on your federal tax income form, but starting in 2024, you can transfer the credits directly to the dealer to receive them in cash at the time of purchase.
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Coral Davenport covers energy and environmental policy for the climate desk from Washington. She was part of a Times team that was a finalist for the Pulitzer Prize for distinguished public service journalism in 2020, and part of a Times team that received Columbia University’s John B. Oakes award for distinguished environmental journalism in 2018. @CoralMDavenport • Facebook -------------------------------
A lot of you players ain't okay.
We would have been better off with an okaycivics board instead of an okayactivist board
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