How to save money with the Inflation Reduction Act before Trump is in charge
Shannon Osaka
Updated 5 min read
For the past two years, millions of consumers have been able to claim cash back from the government for buying electric vehicles, heat pumps, better insulation and more. Through the Inflation Reduction Act, the Biden administration has funneled billions of dollars toward clean technologies, hoping to save Americans money and reduce carbon emissions at the same time.
But President-elect Donald Trump has pledged to “terminate” the cash flowing to clean energy - and has targeted benefits for consumers. Trump attempted to repeal the electric-vehicle tax credit during his previous term in office and has called the Biden administration’s climate law “the green new scam.”
“The parts most vulnerable are consumer facing: Tax credits for electric-vehicle purchases, tax credits for rooftop solar, for heat pumps,” Ben Cahill, director of energy markets and policy at the Cockrell School of Engineering at the University of Texas at Austin, said of the landmark climate law. “Those things will definitely be on the chopping block.”
Here’s how to take advantage of tax credits and rebates for clean energy before it’s too late.
Tax credits
Consumer tax credits have been some of the most controversial and discussed part of the Inflation Reduction Act. Currently, Americans with enough tax liability can claim 30 percent off a home solar panel installation or up to $7,500 off an electric car.
Many Americans have already taken advantage of these programs - the government spent three times as much on tax credits for things such as home solar panels and water heaters in 2022 as originally expected, according to data from the Internal Revenue Service.
Consumers can use an online calculator to see which incentives they qualify for. Many states and local utilities also have their own rebates or incentives that can stack on top of the federal credits.
“They are incredibly popular,” said David Friedman, senior director of policy at Rewiring America, an electrification advocacy group. “You’re talking about raising people’s taxes if you take that away.”
But if Republicans end up with control of the House and the Senate as well as the presidency, experts expect them to target at least some of those consumer programs, especially as the Trump-era tax cuts are set to expire at the end of 2025.
In particular, Trump has spoken out against electric-vehicle tax credits, and EVs broadly, claiming they take too long to charge and are inconvenient for drivers.
A Tesla car is being charged at a Tesla electric vehicle charging station March 20, 2024. REUTERS/Annegret Hilse ·REUTERS / Reuters
“Tax credits and tax incentives are not generally a very good thing,” Trump said on a campaign stop in Pennsylvania in August when asked about the EV credit.
Unlike big wind and solar farms - which are largely being built in Republican areas of the country - electric cars are also mostly sold in Democratic counties. According to a study released last year, half of all EVs sold between 2010 and 2022 went to the top 10 percent most Democratic counties in the United States. Democrats are also much more likely to say they are willing to consider buying an electric vehicle.
Currently, dozens of vehicles qualify for a $3,750 or $7,500 tax credit. (The Energy Department has a full list here.) Eliminating that tax credit would require an act of Congress, but a Trump administration could also change the Treasury Department’s tax requirements, making fewer vehicles eligible.
Ingrid Malmgren, the senior policy director for Plug In America, an EV advocacy group, said one of the most vulnerable tax credits is 45W - which allows carmakers to claim a credit for leasing EVs to consumers. Over the past couple of years, that credit has made EV leases cheaper than gas car leases in some cases. A list of the EVs with the lease incentives is available here.
Consumers who want to lease an EV for lower-than-normal prices - or buy a new or used EV - should do so quickly, she said. “It’s going to be a real durability test of the Biden administration’s policies.”
Consumer rebates
The Inflation Reduction Act also included $8.8 billion in rebates for improving the efficiency of homes or adding electric heat pumps or water heaters. The program is mostly designed for low- and middle-income households. Households can get $8,000 off a new heat pump, $840 off an electric stove or up to thousands of dollars in rebates if they seal up their homes.
A Polytropic air source heat pump mostly powered by electricity from the solar panels on the roof of a building. (photo by Andrew Aitchison /Getty Images) ·Andrew Aitchison via Getty Images
That money, though, has to go through states - each state or territory submits a plan to the Energy Department. And over the past two years, states and the federal government have struggled to get the funding out the door. Currently, nine states - California, Arizona, Colorado, New Mexico, Wisconsin, Michigan, New York, Rhode Island and Maine - as well as D.C., have rebate programs available for consumers. Another 10 states or territories have had their plans accepted, while dozens more are preparing applications.
Nearly every state has said it will accept the funding, according to the Energy Department, and 51 states and territories have either applied for full funding or for early administrative funding to help launch the program and prepare applications.
Consumers can go to the Energy Department website to see which rebates are available to them, and apply for rebates by visiting the website of their state energy agency.
Any states without an accepted plan and a signed contract could lose out on that funding under a new administration. Congress could rescind the unspent funds, or the Trump administration could slow the process of evaluating applications.
Kara Saul-Rinaldi, the president and co-founder of AnnDyl Policy Group, which has helped states prepare for the rebate program, says that most are hurrying to get their applications in by early January. She also hopes that the Trump administration will maintain both programs - even though not a single Republican voted for the bill that created them.
“Energy efficiency has always been bipartisan,” she said. “Wanting to breathe clean air and have a home that’s comfortable are nonpartisan issues.”
