3 Million Households Used 2023 Tax Credits For Solar, Heat Pumps, Efficiency; $8 Billion - 2X Federal Estimates

American taxpayers claimed more than $8 billion in credits on their 2023 returns — more than twice government projections — for making climate-friendly upgrades to their homes under the Inflation Reduction Act, the Treasury Department reported Wednesday.

The 2022 law dedicated roughly $370 billion to curbing harmful emissions and promoting green technology, as well as investments in health care and other components of President Joe Biden’s economic agenda. It also included an array of tax credits and rebates for energy-efficient residential improvements. The nonpartisan congressional Joint Committee on Taxation estimated the first-year costs of those incentives at $2.4 billion. In the next two years, it estimated that people would claim more than $4 billion per year in credits.

Instead, data shows, more than 3 million households claimed $6 billion in credits for solar panel installation and related projects, as well as $2 billion for other home improvements such as new windows and air-conditioning systems. “The reality is, the American people want to adopt solar panels, heat pumps and electric vehicles, and the federal Inflation Reduction Act is helping them do it,” said Leah Stokes, a political scientist at the University of California at Santa Barbara who advocated for the climate credits in the law.

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In most states, 2 to 3 percent of individual and family taxpayers claimed a tax credit for at least one form of climate-friendly home improvement in 2023. The rate was 4 percent in Maine, New Hampshire and Vermont — places where heat pumps have become a popular alternative to costly fuel oil, aided by the states’ own generous rebates and credits for buyers. Oklahoma and West Virginia were the only states with rates below 2 percent. Though nearly half the households that claimed the credits reported annual income below $100,000, the credit uptake was more common higher up the income scale. More than 1 in every 20 households in income brackets higher than $100,000 claimed the credit, despite the fact that some of the credits limited eligibility for higher-income households.

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https://www.washingtonpost.com/business/2024/08/07/ira-climate-credits-homeowners/