The recent signing of the ‘one big beautiful bill’ by President Donald Trump on July 4 is poised to significantly alter many facets of American life, especially in the realm of climate policy.
This legislation, receiving overwhelming support from Republicans, is expected to derail vital efforts aimed at reducing the nation’s greenhouse gas emissions.
The most notable rollbacks in the bill primarily target renewable energy industries rather than individuals, yet the repercussions for consumers trying to make eco-friendly home enhancements will be very tangible.
Under the 2022 Inflation Reduction Act (IRA), various tax credits were established to assist consumers in purchasing climate-friendly technologies such as heat pumps and solar arrays, extending through 2032.
However, this timeline has been shrunk to just a few months, surprising many advocates for environmental reform.
Lowell Ungar, director of federal policy for the nonprofit American Council for an Energy-Efficient Economy, expressed concern that this bill will remove substantial assistance available to consumers.
He pointed out that in the first year alone, around 2 million individuals benefited from the home improvement tax credit.
Despite some negative impacts from the new bill, there is a glimmer of hope.
Significantly, the law does not interfere with the billions of dollars that the IRA has already allocated to state efficiency and electrification rebate programs, meaning much of these funds will stay accessible even beyond the federal law deadlines.
However, Ungar added that these tax credits can potentially save consumers thousands of dollars if utilized before their expiration.
“If consumers are able to make the investment now,” he stated, “it will help them out.”
For those eager to make the most of these credits, here’s a guide on key deadlines.
Buy an EV Before October
Consumers interested in purchasing new electric vehicles (EVs) should act swiftly. EVs manufactured in the U.S. qualify for a tax credit that can reach up to $7,500.
In contrast, no credits will be offered for foreign-made EVs directly to consumers; however, automakers receive these credits and often share the savings through lease options.
Additionally, used EVs priced under $25,000 purchased from a dealer remain eligible for a credit of up to $4,000.
This entire incentive structure will cease after September 30, making new electric vehicles more costly and potentially placing them beyond the reach of low- to moderate-income households.
Income limitations still apply for these EV credits, capping benefits for new vehicles at households earning less than $300,000 and for used vehicles at those under $150,000.
A separate MSRP limit of $80,000 is also in place for new cars.
Interestingly, the tax credit for installing EV chargers, which can provide up to $1,000, is available through June of next year.
Make Home Improvements by the End of the Year
Another valuable opportunity to save money lies within the Energy Efficient Home Improvement Credit.
This credit gives up to $2,000 towards qualified purchases of heat pumps, water heaters, biomass stoves, or biomass boilers, and it includes an additional $1,200 for efficiency upgrades such as insulation, windows, doors, and even comprehensive home energy audits.
Consumers should be aware that all qualifying items must be “placed in service” by December 31 of this year.
It is important to note that tax credits reduce tax liabilities but will not return as rebates, meaning those without a tax bill may not benefit.
Pay for Solar This Year
One of the most impactful incentives being eliminated by the new law is the Residential Clean Energy Credit, which historically covered 30% of qualifying clean energy systems, like solar panels, wind turbines, and geothermal heat pumps, with no cap on the amount.
Given that the average cost of a solar installation in the U.S. hovers around $28,000, this could equate to a tax credit of about $8,500.
However, this tax credit will also disappear at the end of the calendar year. Notably, the legislation refers to the “expenditures” made by this timeframe, allowing for payment for a system even if installation is completed later.
As with previous credits, Ungar advises confirmation of changes with a tax professional.
He also highlighted the potential for higher tariffs as another pressing reason to act quickly.
Nevertheless, he pointed out that many of these improvements will continue to make financial sense in the long term, regardless of the tax credit.
“With or without the tax credit, these improvements bring energy savings that lower energy bills,” Ungar noted, concluding that in some cases, the upgrades are a no-brainer.
image source from：wired
