Energy efficiency tax credits, which reduce daily costs for American households and businesses, would be terminated under a legislative proposal released in the U.S. Senate today. The plan from the Senate Finance Committee is set to be part of the massive tax-related reconciliation bill that could pass the Senate with a simple majority.
The proposal includes provisions eliminating tax credits for home energy efficiency improvements, new energy-efficient homes, and electric cars and trucks, among others.
“Canceling these credits would increase monthly bills for American families and businesses,” said Steven Nadel, executive director of the American Council for an Energy-Efficient Economy. “Why would we stop helping families save energy when prices are going up and up? Americans didn’t vote for higher energy bills. At a time when we’re concerned about strain on the electric grid, it’s particularly absurd to waste more electricity. Senators should restore these credits rather than increase Americans’ monthly bills.”
The proposal includes eliminating the following credits:
The Energy Efficient Home Improvement (25C) credit helps homeowners make improvements that save energy and reduce their energy bills, such as installing insulation or highly efficient HVAC systems. Millions of households have used the credit, which ACEEE estimates helps families save an average of $130 a year. More information is available in an ACEEE fact sheet. The Senate bill would terminate the credit 180 days after enactment.
The New Energy Efficient Home (45L) credit provides an incentive to builders to construct energy-efficient new houses and apartments. ACEEE estimates that the credit will help build more than three million qualifying homes, saving homebuyers an average of $450 in energy costs annually. More information is available in an ACEEE fact sheet. The Senate bill would terminate the credit 12 months after enactment.
The Commercial Clean Vehicle (45W) credit helps businesses purchase electric trucks and cars, spurring commercialization of innovative, clean, efficient electric drivetrains in trucks and other large vehicles and lowering their total operating costs. The Senate bill would terminate the credit 180 days after enactment, with changes in the intermediate time.
The New Clean Vehicle (30D) credit helps individuals purchase new electric cars, while the Used Clean Vehicle (25E) credit helps individuals purchase used electric cars. Both reduce volatile gasoline costs and air pollution. The Senate bill would terminate the former credit in 180 days and the latter in 90 days after enactment.
The parallel reconciliation bill (H.R. 1) passed by the U.S. House also terminated each of these credits, but provisions of the bills differ. The Senate could still modify provisions before a full chamber vote, and both chambers would need to approve identical bills to go to the president for his signature.
Draft Senate committee text for other parts of the bill proposed in recent days includes numerous other attacks on energy efficiency progress. These include provisions to repeal clean car and truck standards and to rescind unobligated funds from or repeal several major efficiency-related programs created or expanded by the Inflation Reduction Act, including the Greenhouse Gas Reduction Fund, Industrial Demonstrations Program, Green and Resilient Retrofit Program, environmental justice grants, Climate Pollution Reduction Grants, and the Loan Programs Office.
