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. Hereās what we know and how it could impact you.
š 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 Trumpās 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 rollbackāespecially on homeowner-focused incentivesāremains possible.
š 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 Republicansāso itās 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 onesālikely 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.
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