Take Advantage of These Clean Energy Tax Credits Before Trump Takes Office

Time may be running out for Americans to capitalize on clean energy incentives created by the Biden administration’s Inflation Reduction Act (IRA), as its climate-focused portions could be on the chopping block once Donald Trump returns to the White House in January.

The Inflation Reduction Act, signed into law in August 2022, was a sprawling bill aimed at reducing the deficit while investing in renewable energy and other projects like lowering prescription drug prices. Trump’s official campaign platform, meanwhile, advocated for reversing Biden’s “Green New Deal” policies and increasing oil, natural gas, coal, and nuclear energy production.

That means the clock may be ticking for American taxpayers to take advantage of several clean energy tax credits, including reimbursements for home improvement projects and electric vehicle subsidies.

Home Improvements

The IRA provided tax incentives for homebuilders to build energy-efficient homes and incentives for homeowners to invest in upgrades like heat pumps, new insulation, energy-efficient doors and appliances, and more.

According to the Internal Revenue Service (IRS), homeowners are still able to claim 30% of the cost of eligible projects as a tax credit. Some credits, like those for installing energy-efficient heating equipment or windows, are capped. The Department of Energy offers guides that outline the energy-efficiency standards that certain improvements and appliances must meet to be eligible for the credits.

Clean energy stocks like those in the solar industry have taken a hit in the week since the election was decided in Trump’s favor as the broader market has rallied. Experts have said repealing parts of the IRA could slow or halt America’s transition away from fossil fuels and said the removal of tax credits could amount to a tax increase for Americans who would have taken advantage of them.

Electric Vehicles

The IRA also included new tax credits to promote the purchase of electric vehicles. Taxpayers buying new electric cars in 2024 could be eligible for a credit of up to $7,500 depending on when the vehicle was made and sold, and its battery capacity, among other factors. The law also introduced a tax credit of up to $4,000 for the purchase of used EVs.

On Thursday, Reuters reported that those on Trump’s transition team plan to axe the EV tax credits. Electric vehicle stocks like Rivian (RIVN) and Tesla (TSLA) slumped following the report, but Reuters reported that Tesla has told Trump’s team they would support ending the credits.

Tesla CEO Elon Musk, one of Trump’s largest donors during the campaign, has said tax credits benefit other EV makers more than Tesla because they allow those automakers to reduce losses on EV sales while Tesla has additional profit-generating measures like batteries and electric trucks, the Financial Times reported.