What will happen to home electrification incentives under Trump?

Canary Media’s Electrified Life column shares real-world tales, tips, and insights to demystify what individuals can do to shift their homes and lives to clean electric power. 

The election of Donald Trump throws a big question mark over the fate of clean energy investments under President Joe Biden’s signature climate law, the Inflation Reduction Act. During his campaign, Trump promised to roll back IRA funds, including billions of dollars for households to buy new heat pumps, rooftop solar, electric vehicles, and other clean energy alternatives.

It’s too soon to say how many of Trump’s pledges will end up materializing. Climate advocates argue that one reason for optimism is the proven popularity of the IRA’s consumer incentives. In 2023, over 3.4 million households received $8 billion in tax credits to make their homes more energy efficient — more than double the amount projected by federal officials.

Still, there’s ​“a very real possibility” that the next administration will shave down home energy rebates and tax credits, said Ingrid Malmgren, senior policy director at the EV advocacy group Plug In America.

That’s because the incoming Republican-majority Congress will likely extend tax cuts passed under Trump in 2017, which the Congressional Budget Office estimates would add close to $5 trillion to the national debt over the next decade. Lawmakers looking to offset that cost have signaled that IRA-related funding, including consumer incentives like the federal EV tax credit, could be on the chopping block.

The clean energy advocates that Canary Media spoke to stressed that if you want to benefit from household rebates and tax credits — which can offset up to 30 percent of the cost of home electrification and energy efficiency upgrades — the sooner you act, the better.

“Regardless of the politics in Washington, consumers across the country should be taking advantage of these incentives to cut their energy bills as soon as they can,” said David Friedman, senior director of federal policy at the electrification nonprofit Rewiring America.

Here’s what we know so far about the future of IRA money for households under the Trump administration — and how you can make use of existing incentives in the next few months.

What’s going to happen to IRA funding for consumers? 

Funding for home electrification under the IRA falls into two buckets: The first is tax credits, which lower your federal tax bill to offset the costs of electric appliances and efficiency upgrades. The second is rebates, which are distributed through states and provide discounts for low- and moderate-income households at the point of sale. For more information on the different types of funding available, check out Canary Media’s cheat sheet for navigating the IRA’s consumer incentives.

Policy analysts say that it’s unlikely GOP lawmakers will pursue a full repeal of the IRA, given that the majority of clean energy and manufacturing investments under the law have flowed to Republican districts. But Republican lawmakers could still chip away at consumer tax credits to offset the costs of extending Trump’s 2017 Tax Cuts and Jobs Act, due to expire at the end of 2025. Any effort to rescind or limit IRA funds would require legislative action. Republicans, who hold narrow majorities in both the House and Senate, would likely need to use a process known as budget reconciliation to avoid the filibuster.

Household rebates not yet awarded to states, which must first apply for federal funding and receive approval, could also be at risk. So far, the District of Columbia and 10 states have launched rebate programs, including Arizona, Colorado, Georgia, New York, and Wisconsin. Eight other states have been approved for funding and are taking final steps to set up their programs. You can see if your state is offering rebates yet on the Department of Energy’s home rebate tracker.

Legal experts say that while funding already committed to states would be difficult to pull back, the incoming administration could potentially delay review for those awaiting approval or withhold unspent funds, although researchers at the Sabin Center for Climate Change Law at Columbia University wrote that doing so would likely prompt court challenges.

All 50 states except for South Dakota have applied or plan to apply for rebate funding, and 38 have already submitted applications. Policy experts expect that more will follow as the January 31 application deadline approaches. Since the election, 11 states, including Kansas, Montana, Texas, and Ohio, have submitted applications.

How soon could the IRA’s consumer incentives be subject to new legislation? 

It’s safe to say that nothing drastic will happen to household incentives at the stroke of midnight on Inauguration Day — and there’s no guarantee that the Trump administration will succeed in rolling them back. ​“First of all, we don’t know for sure it’s going to happen,” Malmgren from Plug In America said. And if it does, the timing ​“really depends on the incoming administration’s priorities.”

Plus, it takes time for legislation to pass through Congress, and even longer for those laws to go into effect. Republican lawmakers will probably pursue an extension of Trump’s 2017 tax cuts sometime in 2025 before they expire, Friedman from Rewiring America said. But even if Congress attempts to reduce or eliminate certain IRA benefits, it’s hard to predict how fast a budget reconciliation process would go.

“If the new Congress makes changes on these tax credits in 2025, it might not take effect until the 2026 tax year or later,” Friedman said. ​“But we really won’t know until Congress acts.”

What should you do now to take advantage of existing incentives? 

Given the political uncertainty, it’s a good idea to start soon if you’re looking to purchase electric appliances or switch to an EV, Friedman and Malmgren said.

To find out whether you’re eligible for home energy rebates — and if so, what kind — click on your state in the DOE’s map tracker. To learn more about the IRA federal tax credits, check out the department’s Energy Savings Hub. Rewiring America also provides a handy personal savings calculator to tally up all the federal incentives — and any additional savings offered by your state, municipality, or utility — available for your unique project. And you can start planning your home electrification journey with the organization’s step-by-step planner and other resources.

If you’re interested in buying an EV, now is a good time to explore your options, especially since many automakers offer end-of-year specials, according to Malmgren. ​“I would encourage people to act sooner, ideally by the end of the year,” she said.

Federal tax credits can help you save up to $7,500 for new EVs and up to $4,000 for used vehicles, and are even available for leased cars. You can find an updated list of eligible new and used models on the DOE’s website, and a list of cars that qualify for lease savings on Leasehacker.

Those credits are usually claimed at the point of sale as long as you purchase them through an IRS-registered dealer, Malmgren added. Plug In America maintains a crowdsourced, incomplete list of registered dealers to get you started, though it’s best if you inquire directly with your local dealer. Some states, like Colorado and California, also offer EV incentives that you can stack on top of federal tax credits.

No one can say for sure what will happen under the next administration. But for now, IRA energy credits and rebates are continuing to benefit American consumers, Friedman said — residents are saving money, improving the air quality around them, and making their homes more comfortable by switching to electric.

“The bottom line ultimately remains the same,” he said. ​“Efficient electric appliances are simply better.”

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