On Tuesday, President Biden signed his landmark bill, the Inflation Reduction Act of 2022. While it is arguable whether the budget reconciliation bill will reduce inflation, the legislation will directly affect climate, tax and Medicare policy over the next decade.
Much of the attention has been focused on things such as the corporate minimum tax, the hiring of an additional 87,000 IRS agents and the ability for Medicare to negotiate prescription drug prices. At the same time, there are specifics on climate-related tax credits that will be directly tied to the PHCP-PVF industry.
Specifically, the bill outlines a tax credit structure over the next 10 years to address home efficiency. The IRA includes:
- Tax credits of up to $1,750 for heat pumps;
- $8,000 for heat pumps that provide space heating or cooling;
- $4,000 for breaker box upgrades; and
- $2,500 for wiring.
As the plan comes into force, there is an expectation that retailers will aggressively market these tax credits to consumers to generate sales. This is in addition to several new or extended green energy tax credits (ranging from EVs to renewables) that are included in the bill.