At the end of 2017, two energy-efficient tax incentives expired. One, in section 25C of the tax code, provided a tax credit to homeowners that covered part of the cost of energy-efficient upgrades, including air conditioners, electric heat pumps, furnaces, etc. The other, in section 45L of the tax code, provided a tax credit to new homes that met high energy-efficiency standards.
Recently, bipartisan legislation in the U.S. Senate and House of Representatives was introduced to restore these credits and related incentives.
The Home Energy Savings Act and the New Home Energy Efficiency Act were introduced by Sens. Maggie Hassan (D-N.H.) and Susan Collins (R-Maine) and Reps. Jimmy Gomez (D-Calif.) and Mike Kelly (R-Pa.).
“I’m glad to be working across the aisle on these commonsense bills that will help households improve their energy efficiency,” Hassan said.
The Home Energy Savings Act would reinstate and extend the energy-efficiency tax credit through 2026 and establish higher goals for home upgrades by modernizing the product-specific efficiency standards in section 25C. It would also increase homeowner incentives to make these upgrades by increasing the credit from covering 10–15% of the cost.
The New Home Energy Efficiency Act would reinstate and extend the new home energy-efficiency tax credit in section 45L through 2022. It would establish higher goals for new homes by modernizing the efficiency standards and increasing homebuilders’ incentives by expanding the credit from $2,000 to $2,500.
“By updating and extending these two effective tax credits, our bipartisan bills will encourage contractors to incorporate energy-efficient designs and materials in new buildings as well as make it easier for homeowners to invest in products such as energy-efficient windows, air conditioners, water heaters and biomass stoves,” Collins said.
Given the bipartisan nature of both of these pieces of legislation, and the mood nationwide for energy efficiency, experts predict that both bills are likely to pass in the House and Senate.