Americans really, really like clean energy tax credits

When the Inflation Reduction Act was passed in 2022, it wasn’t immediately clear how many households would take advantage of the tax credits for solar panels, heat pumps, and other clean-energy upgrades that were part of the legislation.

Last week, we found out: More than 3.4 million Americans took advantage of them in 2023 alone, according to the New York Times, citing data from the U.S. Treasury Department. And they saved them a lot of money.

Give Americans Some Credit

Tax credits allow people to subtract money spent for a specific purpose from their tax bill. For example, the Child Tax Credit lets parents who meet income requirements claim back a tax credit for taking care of their children.

In an effort to fight climate change and stimulate the economy, the White House is using tax credits to encourage people to install systems that help their homes generate electricity and conserve heat and power. U.S. households can claim up to $8,000 for heat pumps designed to efficiently heat homes, up to $1,600 for insulation meant to reduce heating and cooling costs, and much more.

Saving Billions

In 2023, U.S. households claimed $8 billion in clean-energy tax credits, the Treasury Department said. More than $6 billion of that was spent on solar panels, wind turbines, and other renewable energy technology. On average, households who claimed a tax credit got $5,084 for their projects.

The tax credits were “more popular than initially projected,” Deputy Secretary of the Treasury Wally Adeyemo told the New York Times. Credits for solar panels, claimed by 752,300 households, topped the list, trailed by insulation and air sealing at 699,440. Solar panels were most popular in Florida and other sunny states, while heat pumps were highly sought after in chillier regions, such as the Midwest.

Americans looking for additional savings might want to keep an eye on this list of states that offer home energy rebates, which give buyers cash back on appliances and home improvement projects.

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