On August 16th, 2022, US president Joe Biden will officially sign the Inflation Reduction Act into law, after it has cleared both the House and Senate. This is a remarkable bill, not just for its improved energy policy, but for being the most ambitious climate spending bill ever passed in US history.
For one thing, former vice president (and 200 presidential candidate) Al Gore came out speaking favorably of the bill as a “better late than never”: realization of some of the policies he was advocating for. The biggest news in the Inflation Reduction Act is the green energy subsidies including Electric Vehicle (EV) tax credits and solar energy incentives…
The Inflation Reduction Act Includes Tax Breaks and Rebates For Green Energy Initiatives
Consumers can get up to tens of thousands of dollars in tax credits and rebates for undertaking various renewable energy investments. This applies to small businesses as well. A brief overview of the bill’s green energy subsidies:
- $7500 tax credit for purchasing a new electric vehicle
- $4000 tax credit towards the purchase of a used electric vehicle
- 30% tax credit for installing solar panels
- 30% tax credit for installing energy efficient appliances and fixtures
Those “energy efficient appliances and fixtures” include windows, skylights, water heaters, heat pumps, and the like. But keep in mind that this is a tax credit, not a rebate, so if you don’t owe enough taxes, then you won’t get the full credit amount (because they stop when you’re at zero). However, you can also carry a credit forward to offset future taxes.
There are also grants in the bill which will be awarded to individual states, aimed at investing in domestic energy production and manufacturing. This $60 billion in incentives is directed towards the manufacture of residential solar panels, wind turbines, batteries, and energy-efficient appliances.
How Do Green Energy Incentives Help the Economy?
Some readers may have been wondering all this time, why is it called the “Inflation Reduction Act” when it has all this green energy stuff? The answer is, that switching consumers over from fossil fuels to renewables helps the economy on several fronts:
- Solar panels save property-owners on their energy bill
- Solar panels improve the resale value of a home
- Electric vehicles are cheaper to power
- Less reliance on fossil fuels equals more energy security nationally
We have a great example of the need for energy security in our current events. The Russian invasion of Ukraine has had a global impact on the economy, in no small part due to Russia’s control of the fossil fuel market. When Russia applied pressure on fossil fuel prices, it sent world markets into turmoil temporarily. Even with heavy economic sanctions, many countries have chosen to keep buying from Russia because they simply did not have a choice.
In addition, the bill is helping to bolster US-based manufacturing and small business in the energy industry. There are, of course, other measures to counter inflation, including some new tax policies which will only apply to American households making over $400K/year.
Now is a Better Time Than Ever to Invest in Solar Panels!
This is your go-ahead if you’ve been waiting for a signal that the time is right to install solar power. With so many benefits available to both residential and commercial consumers, making the significant investment in solar energy is definitely something to think about. Property owners can do this to help reduce the amount of fossil fuels used on the planet and save hundreds of dollars over time on their energy bills.