January 2025 Newsletter

Jan 15, 2025

Will energy efficient tax incentives survive a second Trump administration?

With Donald Trump returning to the White House later this month, the future of the Inflation Reduction Act (IRA) is uncertain. This landmark legislation has provided unprecedented clean energy incentives for homeowners, but changes may be on the horizon. Hereā€™s what we know and how it could impact you.

 

šŸ˜ A complete repeal of the IRA seems unlikely

The IRA has been driving clean energy growth, supporting over 600,000 new jobs and $50 billion in tax revenue during its first two years. These projects primarily benefit Republican districts, prompting some GOP lawmakers to oppose a full repeal. Yet Trumpā€™s campaign rhetoric included promises to rescind unspent IRA funds and expand oil and gas production, raising concerns about the future of clean energy incentives.

A complete repeal seems unlikely thanks to extensive economic benefits and clean energy jobs heading to red states. Still, a partial rollbackā€”especially on homeowner-focused incentivesā€”remains possible.

šŸ˜• Howeverā€¦ homeowner incentives may be at risk of repeal

There will be a lot of pressure to remove tax credits in order to pay for large tax cuts sought by the new administration and by congressional Republicansā€”so itā€™s quite possible that some IRA incentives that have been helping homeowners (and some renters) cover the costs of energy efficiency upgrades, heat pumps, and electric vehicles might end up on the chopping block. New tariffs could put upgrades further out of reach, to the extent materials are imported. Following are some key IRA incentives at risk for getting reduced or eliminated:

  • Federal Residential Solar Energy Credit: A 30% tax credit for solar and battery storage, currently set to phase out by 2035.
  • Energy Efficient Home Improvement Credit: A 30% tax credit (up to $2,000 annually) for energy-efficient upgrades like heat pumps and air sealing.
  • Clean Vehicle Tax Credit: Up to $7,500 for new EVs and $4,000 for used onesā€”likely among the first incentives to be cut.
  • High-Efficiency Electric Home Rebates: Income-based state rebate programs for home upgrades, though states with existing programs may retain funding. Note: Oregon has had its application approved, has been awarded the funding, and is now taking the final steps to set up its rebates program. They expect the rebates to be available in late 2025.

šŸ˜Ž Why this is a great time for solar

By going solar now, you can lock in savings and take advantage of current incentives before potential changes.

  • If your home is a good fit, now is an excellent time to invest in solar. Prices are near historic lows, averaging $2.69 per watt, and the Federal Reserve has lowered interest rates, making financing more accessible. But these favorable conditions may not lastā€”potential new tariffs and changes to the solar tax credit could increase costs and reduce incentives.
  • In Oregon, specifically in PGE territory, net metering may be at risk. PGEā€™s proposed reduction in solar net metering credits would mean that homeowners with solar panels receive less compensation for the electricity they generate. If approved, Pacific Power will likely follow suit. But you can very likely avoid this by installing solar panels before the potential reduction goes into effect. Read more about this issue here
  • Donā€™t own a sunny rooftop? Sign up for community solar! Get your energy offset by a local solar farm, and get a 5-15% discount on your electric bill. Common Energy currently has availability for PGE customersā€”Learn more and sign up here. If your income is below the thresholds in this chart, you can qualify for higher discount rates by signing up through the Community Energy Project.