Inflation Reduction Act of 2022
The following is a summary of the Inflation Reduction Act (IRA) of 2022 as it pertains to federal tax incentives, credits, and rebates available for the manufacturing and purchase of electric vechicles, associated charging equipment (EVSE), and various clean green energy products.
Subtitle D – Energy Security = $369 billion
PART 1 - CLEAN ELECTRICITY AND REDUCING CARBON EMISSIONS
SEC. 13101. EXTENSION AND MODIFICATION OF CREDIT FOR ELECTRICITY PRODUCED FROM CERTAIN RENEWABLE RESOURCES
Includes eligible technologies pertaining to wind, biomass, municipal solid waste, geothermal, hydropower and marine and hydrokinetic energy production and storage. This section revives the premium tax credit (PTC) for solar facilities and extends the PTC for geothermal facilities.
SEC. 13102. EXTENSION AND MODIFICATION OF ENERGY CREDITPertains to energy production and storage technology, including solar photovoltaics, microgrid controllers, and linear generators.
SEC. 13103. INCREASE IN ENERGY CREDIT FOR SOLAR AND WIND FACILITIES PLACED IN SERVICE IN CONNECTION WITH LOW-INCOME COMMUNITIES
SEC. 13104. EXTENSION AND MODIFICATION OF CREDIT FOR CARBON OXIDE SEQUESTRATION
SEC. 13105. ZERO-EMISSION NUCLEAR POWER PRODUCTION CREDIT
PART 2 - CLEAN FUELS
SEC. 13201. EXTENSION OF INCENTIVES FOR BIODIESEL, RENEWABLE DIESEL AND ALTERNATIVE FUELS
SEC. 13202. EXTENSION OF SECOND GENERATION BIOFUEL INCENTIVES
SEC. 13203. SUSTAINABLE AVIATION FUEL CREDIT
SEC. 13204. CLEAN HYDROGEN
PART 3 - CLEAN ENERGY AND EFFICIENCY INCENTIVES FOR INDIVIDUALS
This section pertains to solar, wind, fuel cell, and battery storage technologies and equipment.
SEC. 13301. EXTENSION, INCREASE, AND MODIFICATIONS OF NONBUSINESS ENERGY PROPERTY CREDIT
Up to $2,000 tax credit for electric heat pumps and heat pump water heaters*
* 30% of the total cost or $2,000 max, whichever is the lesser amount. Also applies to biomass stoves and boilers.
Up to $1,200 annual tax credit total as follows:**
$600 for central A/C, electrical panel upgrades, exterior windows and skylights
$250 for exterior door ($500 total for all exterior doors)
$150 for home energy audit
** items must be Energy Star-rated/approved
NOTE: For eligible home improvements after 2024, no credit will be allowed unless the manufacturer of any purchased item has a product identification number for the item, and the person claiming the credit includes the number on their tax return.
SEC. 13302. RESIDENTIAL CLEAN ENERGY CREDIT
Tax credit of 30% of total cost to install solar, wind, fuel cell, or battery energy storage systems.*
* Battery storage system must have a capacity of at least three kilowatt hours (kWH)
SEC. 13303. ENERGY EFFICIENT COMMERCIAL BUILDINGS DEDUCTION
- Energy Star Single-Family New Homes National Program Requirements
- Energy Star Manufactured Home National program requirements
SEC. 13304. EXTENSION, INCREASE, AND MODIFICATIONS OF NEW ENERGY EFFICIENT HOME CREDIT
Includes Energy Star rated requirements for single-family new homes and manufactured homes.
PART 4 - CLEAN VEHICLES
SEC. 13401. CLEAN VEHICLE CREDIT
Up to $7,500 tax credit for new electric vehicle*
* 30% of the total cost or up to $7,500 max, whichever is the lesser amount. AGI must be less than $150,00 (single) or $300,000 (household).
$7500/$3750 battery critical minerals
SEC. 13402. CREDIT FOR PREVIOUSLY-OWNED CLEAN VEHICLES
Up to $4,000 tax credit for new electric vehicle*
* 30% of the total cost or up to $4,000 max, whichever is the lesser amount. AGI must be less than $75,000 (single) or $150,000 (household).
SEC. 13403. QUALIFIED COMMERCIAL CLEAN VEHICLES
Up to $7,500 tax credit for vehicles under 14,000 lbs *
Up to $40,000 tax credit for vehicles over 14,000 lbs *
* 30% of the total cost or up to the max amount, whichever is the lesser amount.
Includes any vehicle used to transport people or loads on public roads and highways. Also includes mobile machinery as designed in Section 4503(8), which defines such machinery as:
(8) Mobile machinery: Any vehicle which consists of a chassis -
(A) to which there has been permanently mounted (by welding, bolting, riveting, or other means) machinery or equipment to perform a construction, manufacturing, processing, farming, mining, drilling, timbering, or similar operation if the operation of the machinery or equipment is unrelated to transportation on or off the public highways,
(B) which has been specially designed to serve only as a mobile carriage and mount (and a power source, where applicable) for the particular machinery or equipment involved, whether or not such machinery or equipment is in operation, and
(C) which, by reason of such special design, could not, without substantial structural modification, be used as a component of a vehicle designed to perform a function of transporting any load other than that particular machinery or equipment or similar machinery or equipment requiring such a specially designed chassis.
SEC. 13404. ALTERNATIVE FUEL REFUELING PROPERTY CREDITSalient portions for electrical vehicle charging equipment include:
- $100K + 20% cost above $100K
- bidirectional charging
- Allowed for two and three-wheeled vehicles
- low income census tracts or non-urban areas
Home (consumer): Up to $1,000 tax credit for electrical charging equipment for vehicle.*
* 30% of the total cost or $1,000 max, whichever is the lesser amount. Also applies to bi-directional charging equipment.
Commercial: Up to $100,000 tax credit for electrical charging equipment for vehicles.**
** 100K + 20% of cost above 100K. Also applies to 2- and 3-wheeled vehicles and for bi-directional charging equipment.
PART 5 - INVESTMENT IN CLEAN ENERGY MANUFACTURING AND ENERGY SECURITY
SEC. 13501. EXTENSION OF THE ADVANCED ENERGY PROJECT CREDIT
Includes the following:
- Expand or re-equip facilities for the production, manufacturing, or recycling of advanced grid, energy storage, and fuel cell equipment.
- Equipment for the production of low-carbon fuels, chemicals, and related products.
- Renewable energy and energy efficiency equipment.
- Equipment for the capture, removal, use, or storage of carbon dioxide.
- Advanced light, medium, and heavy-duty vehicles and related components and infrastructure.
SEC. 13502. ADVANCED MANUFACTURING PRODUCTION CREDIT
Includes the following:
- Solar Modules
- Wind Turbines and Offshore Vessels
- Torque Tubes
- Structural Fasteners
- Electrode Active Materials
- Battery Cells
- Battery Modules
- Applicable Critical Minerals
PART 7 - INCENTIVES FOR CLEAN ELECTRICITY AND CLEAN TRANSPORTATION
SEC. 13701. CLEAN ELECTRICITY PRODUCTION CREDIT
Section 45Y credits based on grams of carbon dioxide equivalents emitted per KWh generated and either sold to a third party or metered and used.
SEC. 13702. CLEAN ELECTRICITY INVESTMENT CREDIT
SEC. 13703. COST RECOVERY FOR QUALIFIED FACILITIES, QUALIFIED PROPERTY, AND ENERGY STOR.6 AGE TECHNOLOGY
SEC. 13704. CLEAN FUEL PRODUCTION CREDIT
PART 8 - CREDIT MONETIZATION AND APPROPRIATIONS
SEC. 13801. ELECTIVE PAYMENT FOR ENERGY PROPERTY AND ELECTRICITY PRODUCED FROM CERTAIN RENEWABLE RESOURCES, ETC
Credits related to carbon capture, clean hydrogen, and clean energy manufacturing are refundable for all taxpayers, but only for the first five years of the credit period for most credits, after which the credits again become nonrefundable for those taxpayers.
For tax-exempt organizations, government entities, and Indian tribes, these tax credits are more expansive.