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Electrify Everything

In August of 2022, Congress passed historic legislation which will help our nation address climate change while making our homes more comfortable, healthier, and saving you money over the coming years. 

 

The Inflation Reduction Act is a really BIG deal.  It is the largest Climate Action Law EVER, anywhere in the world.

 

It incentivizes clean energy, electric cars and electric homes.  It invests in green technology to ramp up manufacturing and meet all of the new demand.  Coupled with existing policy it has the potential to lower U.S. emissions to 40% below 2005 levels by 2030.  While that is below the 50% required to limit average global temperatures to a 1.5 degree Celsius increase, it is a welcome start.

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TABLE OF CONTENTS

This page provides an overview of:

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Tax credits, rebates and incentives to reduce carbon emissions, improve comfort, protect health and save you money!

  STATE FAIR SHORTCUTS:

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Last updated August 11, 2024.

Incentives-Tax Credits

Tax Credits for Households

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Tax Credits

Thanks to the Inflation Reduction Act, 30% of the cost of solar panels, battery storage, geothermal heat pumps and more can be deducted from your federal taxes.  There are also tax credits for energy efficient windows, doors, insulation and more.  For further details download our handy reference sheet by clicking on the image to the left.

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Our chapter has put together a one page summary, in .pdf format, which details our current understanding of the IRA tax credits that are currently available to help you electrify your home.

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To view or download the 11” x 17” poster, click HERE

 

Note that links to additional resources can be found at the bottom of this webpage.​​

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Electric Vehicle Incentives

The Inflation Reduction Act provides a tax credit that can significantly reduce the cost of a new, used or leased electric vehicle.   Save up to $7,500 on a new EV, or $4,000 on a used EV!

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Click HERE to view or download this chart as a two page .pdf, which details who qualifies (most of us), the requirements the vehicles must meet and which vehicles currently qualify.​ 

 

This EV chart is also available as a one page 11”x17” poster.  To view it, click HERE.

​A frequently updated list of electric and plug-in hybrid vehicles that are eligible for the tax credit can be found at: https://fueleconomy.gov/

To compare of the actual prices and features of the various models, visit:
https://www.shift2electric.com/evinfolist/

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Zero Emission Tesla Model 3

Incentives-EV
Incentives-Rebates

Coming in 2025: 
HUGE Rebates on Home Improvements

If you are still using natural gas, oil or propane to heat your water, dry your clothes, cook your food, and/or heat your home, this is a HUGE opportunity.  You can SAVE a lot of money, while lowering emissions and making your home healthier and more comfortable. 

​The Inflation Reduction Act created two types of rebates for home improvements:

  1. Home Electrification and Appliance Rebates  (aka HEAR)

  2. Home Efficiency Rebates (aka HOMES)

 

Our chapter has put together a 11”X17” poster, in .pdf format, which details our current understanding of the upcoming IRA rebates that will be available to help you electrify your home.  It can be found HERE.

 

Here are the key points:

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Home Electrification and Appliance Rebates

This program has not yet been rolled out, but will eventually provide rebates for the following items:​​​​

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The listed amounts are the maximum rebates permitted by law.  In addition, the maximum total rebate per household is $14,000. 

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However, states could opt to change the size of the rebates. The Minnesota Department of Commerce is responsible for designing the state’s rebate program, but the program must also receive federal approval. Latest word is that the rebates will be rolled out sometime in 2025, perhaps as early as the spring of 2025.

 

How large of a rebate would you qualify for?

  • It is likely that low income households will be eligible to receive a rebate covering up to 100% of the item's cost, up to the listed amounts. 

  • Moderate income households could be eligible to receive a rebate covering up to 50% of the item's cost, up to the listed amounts. 

  • High income households would not qualify for this rebate.

 

How are low income and moderate income defined?

  • The legislation defines low income households as those with household incomes under 80% of the AMI (Area Median Income).  

  • Moderate income households are those earning 80% to no more than 150% of AMI.  The AMI varies by county and the number of persons in a household. 

  • The 2024 AMI figures for each Minnesota county can be found HERE.

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Note that the final guidelines could vary from what we’ve found so far.  Updates on the current status of the rebates are posted on the MN Dept. of Commerce website.  Click HERE.

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Early indications are that those seeking to obtain a rebate will have to fill out an online application.  If funds are available, they will be informed as to what they qualify for, and how much time they have to make the purchase, before the funds go to someone else.  This will insure that Minnesota does not exceed the REBATE funding allocated by the Inflation Reduction Act. 

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Home Efficiency Rebates

This program has not yet been rolled out.

 

This rebate program is expected to launch in 2025 and will provide rebates for whole-home energy saving improvements. The rebate amount is expected to range from $2,000 to $8,000 and will vary based on the amount of energy savings achieved and a household’s income.  The Efficiency Rebates are an alternative to the Home Electrification Rebates.  You cannot use both for the same items. 

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Minnesota is currently designing its program and approach. This program is intended to make homes more energy efficient and provide improvements such as insulation, air sealing and efficient heating and cooling equipment. Existing single-family homes and multifamily buildings will be eligible.

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Tips regarding the rebates:

Minnesota is scheduled to receive around $150 million for the rebate programs (about $75 million each).  Unlike the tax credits, funding for the rebates is limited and could run out within the first year or so.  Plan your projects ahead of time (see below), and don’t miss out!  Watch for program launch dates from the MN Department of Commerce.  (Minnesota's 2024 eBike rebates were all allocated within 20 minutes!)

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Good news:  Note that some items qualify for both electrification rebates and tax credits.  In those cases, the amount that you pay AFTER REBATE can also be used to apply for a tax credit.

 

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Other rebates:  State, Utility and more

In addition to the federal rebates, there are (or will be) be rebates from the State of Minnesota for items such as an Electric Panel Upgrade, Electric Wiring, Air Source Heat Pump, Ground Source Heat Pump, Heat Pump Dryer, Induction Cooktop, Heat Pump Water Heater, Insulation and Air Sealing Materials, Whole Home Energy Efficiency Upgrade, Electric Vehicle (new and used), and an E-Bike.

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As of this writing, most of these rebates are not yet available.  Notable exceptions are the state Electric Vehicle and E-Bike rebates.  Commerce indicates that all of the state funded EV rebates have already been reserved. 

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The state E-Bike program is a two year program. All of the 2024 E-Bike funds were allocated within minutes of accepting applications.

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In addition, the state Energy Storage incentive (battery storage attached to solar arrays) launched on August 1, 2024. 

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The latest information on the state rebates is posted at: https://mn.gov/commerce/energy/consumer/energy-programs/

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Some cities and counties have rebate programs too!

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Check with your electric utility for other rebates.  e.g.:  https://mn.my.xcelenergy.com/s/residential/home-rebates

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Plan your next step!

Note that you don’t have to do everything at once.  There is a 10 year window.  The rebates, however, could run out in a year or so – unless replenished by Congress.

 

  • Start with an energy audit.  (See the next section.)  Then complete the audit's recommendations..

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  • If you have gas appliances that are nearing end of life, or a car that needs replaced, explore the available options now.

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  • As many of the tax credits cannot be rolled over to another year, you might want to limit your purchases, so that you can deduct the full tax credit from your taxes.

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  • Have an electrician check your breaker box for capacity.  Perhaps you need to upgrade your electric service before you get that electric car or heat pump.

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  • Before replacing your furnace, it makes sense to make sure that your home is adequately weatherized.  

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  • Perhaps you need to replace your roof before adding solar panels.

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  • If you want, start small, perhaps replacing your gas range with an electric induction stove, and or your gas dryer or water heater with a heat pump version.

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  • Rebate funding will be limited, but all of the tax credits are available right now.  We encourage you to start electrifying!

 

Recognize that the demand for qualifying products and installation could easily outstrip supply for years to come, as manufacturers and contractors gear up.   Fortunately, it is a 10 year program.   Also note that many contractors and stores are not yet aware of the IRA incentives.  Let them know! 

Incentives-Energy Audits

Energy Audits

Energy efficiency is the cheapest and fastest way to reduce your energy use (saving you money, while reducing emissions).  Make sure that your home is well insulated and weatherized before installing a heat pump system.  An easy way to get started is to schedule a home energy audit.

 

Many utilities offer this service.  For example, Xcel Energy and CenterPoint Energy customers can schedule a home energy audit through the Home Energy Squad, a program that the Center for Energy and Environment administers for the utilities.  They currently charge $70 for a newer home, and $100 for a home built before 2000.  Further details can be found at: https://www.mncee.org/home-energy-squad.

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Depending on your location and income, some households will qualify for free or lower cost energy audits.  In addition, in many cases, 30% of the cost (up to $150) can be taken as a federal tax credit.

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Incentives-Elective Pay
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Elective Pay for Tax-Exempt Entities

The Inflation Reduction Act also includes ELECTIVE PAY (previously called DIRECT PAY) provisions for tax-exempt and governmental entities that do not owe Federal income tax.  For the first time, these entities can receive a payment equal to the full value of tax credits for building qualifying clean energy projects or making qualifying investments. 

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This includes tax exempt entities such as local governments, tribal governments, houses of worship, schools, hospitals, home owner associations, rural co-ops, public utilities and community organizations.

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Eligible projects include rooftop solar, battery storage, geothermal heat pumps, as well as qualifying electric vehicles and charging stations. If your project meets the requirements (see below) your organization could receive a payment covering up to 70% of the project costs.

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* An Energy Community is defined as brownfield sites, communities with high fossil fuel employment and high unemployment, and/or communities with closed coal mines or coal-fired power plants.”

 – Per https://www.cleanenergyresourceteams.org/inflation-reduction-act-what-you-need-know

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# Starting in 2024, for taxpayers using elective pay, the domestic content requirement can also result in a reduction of the investment tax credit amount (for sections 45, 45Y, 48, and 48E) if it is not met.  Per:  https://www.irs.gov/credits-deductions/elective-pay-and-transferability-frequently-asked-questions-elective-pay   (under Q15)

 

Elective pay applies to projects put into service January 1, 2023 through December 31, 2032.

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Overview of the process to claim Elective Pay:

1. Identify and pursue a qualifying project or activity

Determine which IRA tax credit you will seek elective pay for. Elective Pay is not available for all of the IRA tax credits, but it does apply to renewable energy credits and the clean fuel vehicles. A list of the activities that qualify for Elective Pay can be found at https://www.irs.gov/pub/irs-pdf/p5817g.pdf

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2. Determine your tax year, if not already known.

Your tax year will determine when your tax return will be due. See https://www.irs.gov/credits-deductions/elective-pay-and-transferability-frequently-asked-questions-elective-pay#q23 which discusses how to determine your tax year.  If needed, consult legal counsel and tax advisors for assistance with the first two steps.

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3. Complete the project and place it in service

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4. Complete pre-filing registration with the IRS at least 120 days prior to filing your tax return

Create a Clean Energy Business account for your organization. State the credits you intent to earn, along with other information.Upon completing this process, the IRS will provide you with a registration number for the project(s) that must be included on your tax return.See: https://www.irs.gov/credits-deductions/register-for-elective-payment-or-transfer-of-credits

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5. File your tax return by the due date (or extended due date) and make a valid elective pay election.

Local governments and school districts that do not typically file a tax return will file a 990-T whereas nonprofits that usually do a 990 will simply include the credits on their 990 filing.In both cases the form will need to include Form 3800 (which summarizes all Elective Pay credits claimed) and the forms that detail each specific credit.Annotated versions of the required forms are linked to at: https://www.lawyersforgoodgovernment.org/elective-pay-ira-tax-incentives

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6. Receive payment after the return in processed.

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​Note:  This document does not constitute professional tax advice, nor should it be used as the only source of information when making decisions.  This document was pieced together from various government documents, articles and webinars, and is subject to revision.  Hopefully it will provide you with enough information to get started.  While we believe it to be accurate, we cannot guarantee its accuracy.  Consult with your tax experts, for IRS guidance.  Additional resources are listed below.

 

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For further information on Elective Pay see:

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Additional Resources:             (*** = A great place to start)

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(Enter Zip.  Includes project costs, Federal Tax Credits, and even Utility Rebates)

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