R2E2 Resources

1. Are there sources of funding (not restricted to IRA or IIJ) that are available at the time of construction for deed-restricted properties? Are there sources that are available for substantial rehabilitation of such properties?

Yes. Deed restrictions are limits placed on public or private property by a public or private entity. For example, a city may require that a building be used for affordable housing. Deed restrictions would not generally affect eligibility for the federal funds. Depending on the restrictions, they might be one method of showing that residents are (or will be) low-income, a criterion for some programs. However, it is important to note that certain deed-restricted properties may have difficulty using certain types of funding because they utilize complex financing that makes it difficult to incorporate grant funding.

 

2. Are there sources of funding available to buildings that will be subsidized after a retrofit is completed?

Yes. We are not aware that programs have specified whether buildings that will receive rent assistance after retrofits (but do not currently) are eligible. For multifamily buildings that may be eligible for HUD-subsidies, applicants could consider contacting HUD to explore eligibility. State energy offices may not yet have answers on the DOE rebates. Other programs may not have any income restrictions, so the buildings would be eligible.

 

3. Can any funds be used to upgrade circuit/breaker boxes or to complete capacity upgrades in homes to support future upgrades?

Some federal funds are specifically designed to support single-family and multifamily home electric upgrades. Depending on state-level program design, other federal funds may also be eligible for such upgrades.

The Home Electrification Rebates will include up to $2,500 per home for electric wiring upgrades and up to $4,000 for breaker box upgrades. The Home Efficiency Rebateslikely could include electrical work needed to install energy-saving equipment, which further guidance from DOE and states will clarify.

The 25C tax credit includes up to $600 for electrical panel and circuit upgrades that enable installation of a heat pump, heat pump water heater, or other efficient equipment that also qualifies for the tax credit. Other broad climate funding (such as the Climate Pollution Reduction Grants, Greenhouse Gas Reduction Funds, or others) might also be able to support electrical work.

 

4. If you already have a climate action plan, can you still apply for implementation funding through the Climate Pollution Reduction Grants (CPRG)?

Yes, though the plan may need to meet certain criteria. EPA has said governments can apply for grants to implement climate action plans even if they did not receive a CPRG planning grant, i.e., a Phase 1 grant. The Notice of Funding Opportunity detailing requirements should be available later this year (2023).

 

5. Are there any new federal funding sources that would allow bigger nonprofits to act as intermediaries, redistributing funds to smaller CBOs who can then help to support the outreach and direct disbursement of funding?

Depends on the program. The EPA Environmental Justice Thriving Communities Grantmaking Program is designed for that, and the Environmental Justice Government-to-Government Program is for government agencies in partnership with CBOs. The Clean Communities Investment Accelerator in the Greenhouse Gas Reduction Fund (GGRF) will use nonprofits to support community development financial institutions (CDFIs) and other local financial institutions, which may include CBOs.

 

6. How can the Low-Income Home Energy Assistance Program (LIHEAP) be used for weatherization?

States may allocate up to 15 percent of their LIHEAP funds (or up to 25 percent if they apply to receive a waiver) to residential weatherization or energy-related home repair. The majority of states already set aside a share of LIHEAP for these purposes, in some cases as a result of state legislative requirements to do so. These funds can be used to support weatherization measures in income-eligible households, including envelope improvements, other efficiency upgrades, or energy-related home repairs. State programs may vary in scale and scope. Funds are typically administered by the same office that administers Weatherization Assistance Program funding.

 

7. Which new federal funding opportunities can be used for low-income multifamily rental properties? 

Various federal funding sources will be available directly or indirectly to multifamily building owners, especially buildings with low-income tenants. ACEEE has previously published a brief overview of home energy upgrade incentives, which includes incentives for multifamily buildings. Some federal programs that are explicitly designated for multifamily properties include:

• HUD’s Green and Resilient Retrofits program supports retrofits of HUD-assisted low-income multifamily buildings.
• Multifamily building owners are eligible for DOE’s Home Energy Rebates program, with elevated rebate amounts available to buildings with more than 50% low-income tenants.
• The Section 179D tax deductions and other tax incentives are available for multifamily building owners pursuing energy retrofits.

 

Other federal programs have broad mandates that may include multifamily properties once implemented. These include but are not limited to the following:

• EPA’s Greenhouse Gas Reduction Fund. Funding is available to states and local and national financing institutions to support solar and clean energy projects. Some of this funding will be available to multifamily building owners in the form of grants (for solar) or accessible financing.
• EPA’s Climate Pollution Reduction Grants may go toward multifamily properties to the extent that state, local government, or territory winners include multifamily retrofits in their  climate plans.

 

8. People are very worried that electrifying will ultimately lead to increases in utility bills since the price of gas is often cheaper than electricity. How do we ensure that utility bills stay the same or get lowered, especially for low-income people?

Whether electrifying space heating reduces energy bills depends on multiple factors, including local gas and electric prices, local weather, the efficiency of the equipment, and the efficiency of the home. We encourage program administrators to (1) design electrification programs to require an analysis to assess the bill impacts before electrifying a home (this is required for DOE’s electrification rebates), (2) pair electrification with weatherization upgrades to reduce the overall energy needs of the building, (3) consider on-site solar where possible, and (4) consider ways to subsidize high energy bills.

In addition to using rebates or other new federal efficiency programs for weatherization, DOE’s longstanding Weatherization Assistance Program (WAP) has received a large infusion of funding. Retrofit programs should coordinate with their state WAP office or local community action agencies to combine weatherization funding with projects pursuing electrification. Additionally, states may allocate some of their Low Income Home Energy Assistance Program (LIHEAP) funding to weatherization and related repairs.

 

9. Do ground source heat pumps with desuperheaters and energy recovery ventilators qualify for any funding source? 

Yes. Desuperheaters and energy recovery ventilators boost home energy efficiency by recovering energy that would otherwise be wasted. A desuperheater is a heat exchanger that transfers excess heat from the heat pump’s refrigerant line to the home’s water heater rather than rejecting the heat to outside air or the ground. Energy recovery ventilators (ERVs) are mechanical ventilation systems that transfer heat and moisture between the fresh intake air coming into the home and the stale exhaust air. In the winter, an ERV captures heat and moisture in the exhaust air and transfers it to the cold intake air. In summer, the cooler exhaust air takes on heat and humidity from the incoming air to keep it out of the home.

Ground source heat pumps qualify for Section 25D clean energy credits for homeowners and Section 48 investment tax credits for companies; they may help earn a Section 179D tax deduction (for multifamily building owners). To qualify for the 25D credit, which covers 30% of the installed cost, ground source heat pumps (sometimes referred to as geothermal heat pumps) must be ENERGY STAR® qualified. Most ground source heat pumps will have desuperheaters, so these features will likely be included in the cost of the heat pump. While some contractors may install a separate ERV system as part of a ground source heat pump installation, ERVs are not typically built into the heat pump. Separate ERV systems may qualify for Section 48 or 179D tax credits.

Ground source heat pumps (in some cases with ERVs) may also be eligible for funding through other federal programs: as part of a qualified electrification or home efficiency project through DOE’s home electrification rebates; or as part of qualified efficiency projects in HUD-assisted multifamily buildings through the Green and Resilient Retrofit Program. Ground source heat pumps may also qualify for funding through yet-to-be-implemented federal programs, such as EPA’s Climate Pollution Reduction Grants, or for financing through parts of the Greenhouse Gas Reduction Fund. More details on eligible uses for these funds will be finalized over the next year as EPA selects recipients.

Some state renewable energy tax incentives also include ground source heat pumps as an eligible measure.

 

10. Can an upgrade of a residential electrical system to charge an electric vehicle (EV) qualify for rebates or other funding?

Maybe. The Home Electrification Rebates cover upgrades to electrical wiring and/or electrical panel load service centers, though the guidance makes no specific mention of electric vehicle charging. States may provide more detailed guidance (or restrictions).

The Section 25C tax credit covers upgrades to “a panelboard, sub-panelboard, branch circuits, or feeders” that enable energy efficiency improvements or the installation of select HVAC equipment. The credit is not available directly for upgrades made to enable EV charging but may support a home in becoming EV-ready.

We note that the Section 30C alternative fuel vehicle refueling property credit tax covers electric vehicle charging equipment but does not appear to cover associated electrical system upgrades. Some yet-to-be-implemented programs (GGRF, CPRG) may allow for EV-related electric system upgrades. State programs may also support this.

 

11. Which federal funding sources can be used to fund decarbonization education and which types of activities are allowable? Could this include ESL adult education programs that address climate issues? 

Numerous funding sources may be used for decarbonization education, though each has specific eligibility criteria and guidance. One source that identifies public education as an eligible use is the Department of Energy’s Energy Efficiency and Conservation Block Grant Program (EECBG). One of the eligible activity categories for this source is “Energy Efficiency and Conservation Programs for Buildings and Facilities,” which includes “public education.” While there is additional eligibility guidance for this category, one example activity includes “programs for public education including training or workshops.” For more information on how to incorporate public education     initiatives into program offerings, see DOE’s EECBG Blueprints.

Similarly, the Environmental Protection Agency’s Environmental and Climate Justice Block Grants (ECJBG), under Funding Track 1 – “Community Driven Investments for Change” – stipulates that “public education” related to air toxins and how to monitor them may be eligible project activities. It is unclear whether ESL adult education programs would be eligible program activities for either of these sources of funding; they would likely have to be in service of the broader public education goals identified in the rules documents.

 

12. Which funding sources can be leveraged for home repair in order to enable energy efficiency upgrades?

While there is no one federal funding source specifically dedicated to home repairs, such as safety and structural improvements,, many federal efficiency or housing preservation funds may be relevant. For example, the Weatherization Assistance Program (WAP) has funding set aside through the Weatherization Readiness Funds (WRF) to address repairs that otherwise preclude an income-qualified home from receiving weatherization upgrades. Several states use Low Income Home Energy Assistance Program (LIHEAP) funds for weatherization-readiness as well.  The Department of Housing and Urban Development (HUD) hosts several programs that are designed to preserve the availability and quality of affordable housing. Funds such as the community development block grants (CDBG) or forthcoming funding for manufactured homes from the Preservation and Reinvestment Initiative for Community Enhancement (PRICE) could be used by states, local governments, or other eligible organization to prioritize home repairs that enable weatherization. For example, one Minnesota program recently received CDBG funding specifically to address critical repairs in manufactured homes to enable weatherization.

States may also consider using Medicaid funding to offer critical safety repairs or weatherization as nontraditional medical programs. The Medicaid “1115 waiver” allows states to pilot health care services not typically covered. And some states use their own funds or utility ratepayer funds.

Other federal programs provide funding to support upgrades to enable electrification or renewable energy upgrades. DOE’s home electrification rebates may be used for electric system, insulation, or air sealing upgrades that enable the installation of high efficiency electric equipment. EPA’s Solar for All funding may be used for structural repairs or electrical upgrades needed to install solar panels. Some yet-to-be-implemented federal programs, such as the Climate Pollution Reduction Grants or parts of the Greenhouse Gas Reduction Fund, may also allow for repairs relevant to home efficiency or energy upgrades.

 

13. Are there any resources within the IRA or elsewhere that can go to manufacturers of clean energy technologies so manufacturers can expand their capacity to meet demand?

Yes. The IRA dedicated significant funding to directly support clean energy manufacturers, including tax credits for manufacturers through the  Qualifying Advanced Energy Project Credit (Section 48C) and the Advanced Manufacturing Production Credit (Section 45X); DOE loan guarantees and funding for energy communities; Defense Production Act funding that the administration has directed to heat pumps, insulation, solar, and other technologies; and clean vehicle production funding through Advanced Technology Vehicle Manufacturing and Domestic Manufacturing Conversion Grants.

 

14. Is there help out there for states with very small or non-existent energy offices?

Yes. Broadly speaking there are many federal programs dedicated to providing some level of technical assistance and to support capacity building for state energy offices. The Department of Energy’s (DOE) State Energy Program (SEP) provides broad funding for state energy offices. DOE’s Home Energy Rebates program provides up to 20% for administrative expenses (including advanced funding states are using now to prepare their applications) as well as technical assistance. The Environmental Protection Agency’s (EPA’s) Climate Pollution Reduction Grants (CPRG) is providing funding and extensive technical assistance for offices (typically environmental agencies) developing climate plans. Other funding and assistance, as well as assistance from nonprofit groups (including ACEEE) will depend on the state, the agency, and the type of program(s) that states are looking to implement.

The White House has released a Technical Assistance Guide that provides a comprehensive list of technical assistance made available through new federal funding (including but not limited to technical assistance for states and state energy offices). DOE has also collected a list of technical assistance resources by sector. A list specifically for states looking for clean energy assistance is available from the Clean Energy States Alliance.

For additional information on eligibility, timing, requirements from DOE, and more, see R2E2’s explainer of the Home Energy Rebates. 

15. Does receiving a tax credit preclude an owner from getting rebates?

No: An owner may receive a Home Energy Rebate and claim a tax credit—a reduction in the amount of taxes owed, or tax liability—if eligible.  In general, the owner cannot claim a tax credit for the portion of the cost paid by the rebate (or by anyone else). For example, Section 25C tax credits may be used for some efficiency measures that are also eligible for DOE rebates.

 

16. Are heat pump rebate projects also eligible for the 30% tax credit?

Yes, in general a rebate may be combined with a tax credit applied to the balance of the costs.  However, in some instances the eligibility criteria for the rebates may differ from the tax credits, so some people will only be able to claim one of them.

 

17. For the purposes of eligibility for rebates for low- and moderate-income households, what year is income calculated for and how is it verified?

Individual states will set income verification requirements and procedures, so that is not yet clear. The law states that income qualifications will be based on Department of Housing and Urban Development (HUD)’s calculation of area median income (AMI).These calculations are released annually in March or April for each fiscal year.

Among other methods, states are required to allow residents who have qualified for other federal programs with comparable income limitations (80% or less of AMI in the case of the efficiency rebates, or 150% or less of AMI in the case of the electrification rebates) to qualify automatically. DOE has released a list of approved federal programs for automatic eligibility.

The initial program guidance does not further specify how states must verify income. DOE, in collaboration with the National Association of State Energy Officials (NASEO), will provide assistance and develop additional resources to support states with developing income verification methods.

 

18. How is eligibility for rebates determined at the point of sale?

States will determine elements of the eligibility verification process, likely using private vendors. For point-of-sale rebates the contractor would need to confirm the income eligibility of the household (see response to question 7) and that they had not already used up their rebates, likely using web-based apps.

The contractor would also confirm that the proposed measures qualify. For the Home Electrification Rebates, the project must be a qualified electrification project, and electrical equipment must be ENERGY STAR certified.

States are not required to provide point-of-sale rebates for the Home Efficiency Rebates. However, DOE has suggested that states may structure their rebate programs to apply rebates in a manner that reduces the purchase price for consumers.

 

19. How soon do we expect the efficiency and electrification rebates to be exhausted, once offered?

The length of time the rebates will be available is likely to vary considerably by state. Many new homes include heat pumps and other qualifying equipment, so in states that allow electrification rebates for new homes, the money for those rebates could be used up in a couple years. Whole home retrofits are less common, so the efficiency rebate funds may last longer. At a minimum, the law requires that these funds be spent by September 2031.

 

20. Do tribes have to be federally recognized to receive the electrification rebates?

Yes. The electrification rebate program sets aside $225,000,000 in grants for “Indian Tribes” as defined by the Indian Self-Determination and Education Assistance Act (25 U.S.C. 5304). Indian Tribe is defined there as “any Indian tribe, band, nation, or other organized group or community, including any Alaska Native village or regional or village corporation … which is recognized as eligible for the special programs and services provided by the United States to Indians because of their status as Indians” (see also CRS).

 

21. Would a nonprofit that pays for and installs qualified electrification projects (QEPs) be able to submit for a reimbursement?

Likely yes. For Home Electrification Rebates, nonprofits that carry out qualified electrification projects are specifically eligible for rebates (along with low- and moderate-income households, multifamily building owners, and other entities carrying out projects, including for-profit companies). Home Efficiency Rebates can go to homeowners or aggregators. “Aggregators” can be any entities approved by the state that oversee or carry out multiple retrofits. States or DOE may provide further details.

 

22. If rebates flow through state energy offices, are home energy rebate funds provided to states under a formula? How does this work if a state does not have a state energy office (SEO)?

Yes. Home energy rebate program funds will be allocated to states, territories, and Tribes by formula, i.e., the total funding that each state is eligible for is pre-determined by DOE using a formula. Initial funds available by state or territory can be found here. In order to access these funds, states must submit an application to DOE with a detailed rebate program implementation plan. After the first two years (August 2024), remaining rebate funds (for example, from state allocations that states chose not to apply for) may be redistributed among states with rebate programs.

All states (and U.S. territories) have designated state energy offices or organizations.

 

23. Do window-mounted heat pumps qualify for IRA rebates?

Home Electrification Rebates: Not currently. DOE has specified that heat pumps need to be ENERGY STAR certified for both heating and cooling. Mini-split heat pumps, typically mounted on the inside and outside of a wall, may qualify as well as central heat pumps, but there currently is no certification (or even an efficiency rating) for window-mounted heat pumps (also called room heat pumps). When they are certified, they will qualify.

Home Efficiency Rebates: Likely yes. The home efficiency rebates are designed to compensate homeowners for overall energy savings, regardless of equipment type. While the law does not exclude any specific equipment, it is possible that further DOE or state guidance may prioritize certain energy saving strategies.

 

24. How does the contractor $200 incentive program work?

The IRA includes a $200 incentive to contractors or aggregators for each Home Efficiency qualified energy efficiency retrofit performed in a disadvantaged community. DOE defines a “Disadvantaged community” using Justice40 initiative’s Climate and Economic Justice Screening Tool. States may also apply with DOE to adopt an alternate definition. The Home Electrification rebates include up to $500 (depending on the size of the project) for the installer of any project.

Additional details on the contractor incentive program will be detailed in state guidance.

 

25. Does anyone have recommended strategies to use the IRA rebate programs with Low Income Housing Tax Credit (LIHTC) properties? 

Federal grants reduce LIHTC eligible basis or are treated as taxable income.

Eligible basis, calculated based on total construction costs, is used toward the calculation of the total tax credit for LIHTC properties.

We have raised this issue with DOE. For tax purposes, DOE has stated that the home energy rebates will be treated as a reduction in the purchase price or cost of property, i.e., a reduction in the eligible basis.  Note that the 45L tax credit for new or substantially renovated homes does not reduce the LIHTC basis.

For more information on using the IRA with LIHTC properties, please see a case study assembled by DOE in February of 2024 titled “Using Whole Home Energy Rebates to Preserve Affordable Multifamily Housing.”

 

26. Is there a specific software to be used for Home Energy Rebates?

DOE provides some parameters but does not require specific software for states. In all cases, states are required to report the software or method they intend to use to DOE.

States may elect to use the DOE Tracking Application Programming Interface (API)developed by Pacific Northwest National Laboratory (PNNL) to facilitate reporting to DOE.

States also have flexibility around which software they use to measure energy savings. For the modeled savings pathway, DOE guidance specifies that states must use a BPI 2400 compliant, DOE-approved software to estimate savings prior to the efficiency upgrades. Common BPI 2400-compliant modeling software used by home performance contractors includes Hancock, Optimiser, SnuggPro, and TREAT. In circumstances where energy savings cannot be modeled using the BPI 2400 methodology (multifamily buildings, a home with less than 1 year of energy data, etc.), states may use a simplified modeling approach.

For the measured savings pathway, states are required to use DOE-approved open source measurement and verification (M&V) software to estimate energy savings after the efficiency upgrades.

 

27. Are some rebates available at point of sale and some not?

Yes. The law requires that the Home Electrification and Appliance Rebates be available at the point of sale but does not specify the same for the Home Efficiency Rebates. DOE guidance requires that states provide Home Efficiency Rebates between 28 and 60 days after a project is complete and documents have been submitted to the state (for measured savings this is after collecting a year of energy use data). However, the law does provide for “aggregators” that would pay contractors up front and then collect the rebate. DOE has encouraged states to establish methods that prevent low-income customers from having to pay up-front costs out of pocket and will recommend workflows for states that elect to provide the Home Efficiency Rebates as point-of-sale rebates.

 

28. How will consumers receive the home energy rebates?

Mostly through contractors, “aggregators,” or other eligible representatives. Consumers that are paying out of pocket for eligible projects will likely receive the Home Electrification and Appliance Rebates—which are legally required to be available at the point of sale—through their project contractor. States may also allow other organizations carrying out electrification projects on behalf of qualified residents (“eligible entity representatives“) to provide the rebates directly to consumers (or more likely, to the contractors who then pass the rebate to the customer).  In their program designs, states will provide detailed guidance on how contractors and aggregators will determine eligibility and rebate amounts.

The law does not require the Home Efficiency Rebates to be provided at the point of sale. As discussed in the response to question [11], DOE has encouraged states to include this option in their program design. In this case, contractors or “aggregators”—organizations carrying out a portfolio of efficiency retrofits—will likely provide the rebates directly to consumers. And at least for the measured pathway, homeowners could just receive free services or be charged a lower amount but not see the rebate directly.
Retailers. If consumers are buying their equipment from a retailer, point of sale rebates will be available from the retailer. State level programs will vary. Follow forthcoming state-level developments to find out how the point of sale rebates will be administered in your state.

Direct from the State. States may offer an option for households to apply directly to the state (or to a program implementer) to receive the Home Efficiency Rebates after the completion of their project. This option will require a more onerous application process for the consumer, as well as a delayed timeline in receiving the rebate.

 

29. Are nonprofit organizations also eligible for rebates?

Yes. A nonprofit may be eligible to receive rebates in various ways. First, if a nonprofit owns a single family or multifamily building that qualifies (e.g., in the case of the electrification rebates, the residents meet the income qualifications), they will be eligible to receive rebates for qualified projects. Second, nonprofit organizations that implement projects are eligible to receive the home energy rebates on behalf of a qualified household (and may need to pass the rebate on to the household). Third, nonprofits may also be eligible for additional incentives. There are some differences between the two rebate programs, discussed below.

For the home electrification rebates, an “eligible entity representative”—an entity carrying out a qualified electrification project on behalf of an eligible entity—could be a nonprofit, local government, or for-profit organization.

Additional Incentives: Contractors, which could be nonprofits, qualify for additional incentives of up to $500 for completing a qualified electrification project in a disadvantaged community or for installing specific equipment as part of a qualified electrification project.

For the home efficiency rebates, the law allows an “aggregator”—an entity carrying out qualified efficiency projects for multiple homes—to receive a rebate. Neither the law nor DOE guidance appears to limit what kind of entity may act as an aggregator, so a nonprofit could qualify.

Additional Incentives: Either aggregators or contractors are eligible for an additional $200 incentive for completing a qualified efficiency project in a disadvantaged community.

 

30. Will the rebates be taxed as income?

No. The home energy rebates will not be taxed as income. They will be treated only as a reduction in costs for eligible projects or equipment that may affect an additional tax credit or, for a business, tax depreciation.

 

31. Can a customer claim any of the rebates/credits if they received energy efficient measures for free from a nonprofit or utility program?

No. The Home Energy Rebates are generally structured as a percentage of the total project cost. If the project cost to a customer is $0, their rebate will also be $0. However, as discussed in response to question [14], the nonprofit or utility that incurs the cost of the project will likely be eligible to receive the rebate if the project qualifies.

 

32. Could undocumented residents qualify for the home energy rebates?

Yes. Neither the law nor the DOE guidance specifies that homeowners must have legal status in the U.S. However, undocumented residents may face challenges providing the income documentation required for the electrification rebates or for the increased efficiency rebates. States have discretion to design their own income verification methods, so these challenges will vary by state, and states could further restrict eligibility.

 

33. Has anyone successfully created and implemented a state rebate that is administered at point of sale?

Yes. Thanks to funding from the American Recovery and Reinvestment Act of 2009 (ARRA), DOE’s State Energy Efficient Appliance Rebate Program provided funding to states to deliver consumer rebates for household appliance purchases. States had flexibility in how they delivered rebates, but some opted to provide point-of-sale rebates. Lessons learned from this program can be found here.

At the state level, utilities frequently provide customer point-of-sale (or “instant”) rebate programs to incentivize efficiency upgrades. These rebates are typically available through contractors or sometimes directly through retailers. In addition, many utilities have successfully run “upstream” programs that provide a rebate to LED lightbulb distributors or retailers, resulting in a lower sticker price for consumers

34. What is the difference between a refundable and nonrefundable tax credit? Are any tax credits refundable?

A tax credit reduces the amount of tax liability, or taxes owed, for an individual or organization. If a tax credit is refundable, this credit will be applied regardless of the amount of tax liability. If it is nonrefundable, the tax credit will only be applied to the total tax liability. For example, if a homeowner qualifies for a $600 tax credit but has no tax liability, they will receive a $600 tax refund if this credit is refundable and will receive nothing if the tax credit is nonrefundable. Consequently, nonrefundable tax credits may be less relevant for low-income households, which typically have no tax liability.

25C and 25D tax credits are nonrefundable. From an IRS Fact Sheet: “Q2. Are the credits refundable or nonrefundable? (added December 22, 2022) A2. Both the Energy Efficient Home Improvement Credit and the Residential Clean Energy Property Credit are nonrefundable personal tax credits. A taxpayer claiming a nonrefundable credit can only use it to decrease or eliminate tax liability. A taxpayer will not receive a tax refund for any amount that exceeds the taxpayer’s tax liability for the year.”

45L tax credit and 179D tax deduction are nonrefundable. But the business can carry the unused credit or deduction forward to reduce tax liabilities in future tax years. And nonprofits and government agencies can allocate the 179D deduction to the primary “designer” of the project, which could include architects, engineers, or energy service companies.

 

35. Is the “carry forward” provision applicable to both 25D and 25C?

Yes for 25D, no for 25C. A taxpayer may carry forward the 25D clean energy tax credit to another tax year, but not the 25C energy efficiency credit. See IRS Fact Sheet, p. 6-7.

 

36. Can any tax credits in the IRA or BIL be transferred or sold to investors?

Yes for the business tax incentives, Government agencies and nonprofits can transfer the 179D tax deduction—for owners of multifamily buildings over three stories pursuing qualified energy efficiency upgrades—to the primary designer of the qualifying building systems (and should be aware of this in negotiating the contract). The business investment tax credit (Section 48) and production tax credit (Section 45) for commercial renewables, including for large multifamily building owners, generally are either refundable or transferable. The personal tax credits, including Section 25D and 25C, cannot be transferred or sold.

 

37. Can a homeowner receive credits if they received energy efficiency measures free of charge from a nonprofit or utility program?

No. The tax credits are generally based on the cost paid by the taxpayer. The Home Energy Rebates also will be based on the cost, but the nonprofit or utility might be able to claim the rebate, depending on further DOE or state guidance.

 

38. Are undocumented community members eligible for tax rebates?

Yes. Generally, undocumented community members who pay taxes are eligible for tax credits, unless the tax credit specifically requires a social security number (such as the Earned Income Tax Credit) (source: CRS). The two efficiency tax credits available to households, Section 25C (energy efficiency credits) and Section 25D (clean energy credits), do not require that the taxpayer have a social security number.

 

ASHRAE Standard 90.1 is updated every three years.  Which year will the IRC 179D be using?

The current baseline is ASHRAE Standard 90.1-2007. Starting in 2027, the baseline will be 90.12019.

The tax code specifies 90.1-2007 or the most recent ASHRAE 90.1 published for which “DOE has issued a final determination, and which has been affirmed by the Secretary, after consultation with the Secretary of Energy, for purposes of this section not later than the date that is 4 years before the date such property is placed in service.” Treasury affirmed 90.1-2019 in December 2022, to take effect in 2027.

 

39. Are any tax rebates available retroactively? That is, can these tax credits be claimed for measures that were installed in previous years?

Yes – to varying degrees. The tax credits (Section 25C, 25D, 45, 48, and 179D) are generally available for measures “placed in service” (installed and usable) in 2023. There also are tax credits for measures installed in earlier years, but the credits for individuals would have to be claimed on prior-year tax returns and often (including for all the energy efficiency incentives) under earlier, less generous rules.

States have not yet set rules for the Home Energy Rebates but are not likely to make them retroactive.

 

40. What is a tax liability? Does it matter if some or all of your tax liability may have been deducted from your paycheck?

Tax liability is the total amount in taxes you owe to the IRS in a given year. The energy tax credits are not refundable, so if you do not owe any taxes, you cannot take the credit. It does not matter if some or all of your taxes have been withheld from your paycheck. If you have a tax liability in a given year and all of it has been withheld from your paycheck but you also qualify for a 25C or 25D tax credit, the IRS will provide a refund for the relevant credit amount.

 

41. Can you share insights about the Direct Pay model?

Direct Pay (aka Elective Pay) allows entities that would otherwise not be eligible for tax credits (e.g., state and local governments and tax-exempt or nonprofit organizations) to receive “direct pay” for clean energy tax credits—even though they do not pay income tax, the IRS will pay them the amount they would have received as a tax credit. Direct pay will be especially relevant for local governments or nonprofit developers interested in pursuing solar projects, since this will be the most common clean energy project eligible for the direct pay provisions. For additional information on direct pay, see the White House What is Direct Pay page. A full list of relevant tax credits and application guidance can be found here.

 

42. Will Direct Pay mean that consumers will effectively get a point of sale discount with contracting services provided by a nonprofit?  

The tax credits for individuals are not eligible for Direct Pay. The new Direct Pay provisions make tax-exempt organizations like nonprofits eligible to receive the many business clean energy tax credits they were previously not eligible to receive. In practice, these organizations will receive this tax credit as if it were a tax refund (i.e., after filing a tax return at the end of the year). While nonprofits that charge consumers may elect to use this tax credit toward lowering point of sale costs for their goods or services, this is not guaranteed by the direct pay model. In other words, it is up to the nonprofit whether they provide upfront discounts based on the tax credits they can expect to receive later on.

 

43. Can entities who don’t owe enough taxes for a nonrefundable tax credit join forces with those who do have enough such taxes?

Yes. Entities that do not qualify for direct pay (i.e., for-profit businesses that do not owe taxes) can transfer or sell eligible clean energy tax credits. A list of eligible clean energy tax credits can be found on the IRS page on Elective Pay and Transferability Frequently Asked Questions: Transferability. Transferability will be relevant for organizations that are eligible for the tax credits but do not have enough tax liability to reap the benefits.

 

44. Do tax credits benefit low-income residents?

It depends. Low-income households typically do not have to pay income tax. Therefore, if a tax credit is nonrefundable, it will likely not benefit a low-income resident. However, households could indirectly benefit from businesses or nonprofits that take business tax credits (e.g., a homeowner leasing solar panels or a renter whose landlord gets a tax deduction for an energy retrofit). For additional information on the difference between refundable and nonrefundable tax credits, see the response to Question 16.

 

45. How much tax does a family need to be liable for to benefit from tax credits?

Usually the amount of the tax credit. If the tax credit is nonrefundable, then the credit will only go toward reducing the tax they pay. This means they will only benefit from the credit if, when they file their tax return, the total tax owed (including amounts already paid in withholding or estimated taxes)  is at least the amount of the credit. For example, if a family installed equipment potentially entitling them to a tax credit of $800, but their tax liability was only $600, then they could only receive a $600 tax credit.

Households should be mindful of any annual maximums that may apply to their tax credits of interest. If an annual cap applies and the credit may not be carried forward, households may consider staggering qualified projects over multiple years.

 

46. Are the residential Section 25C and Section 25D tax credits contingent on income level?

No, except that, as discussed above, nonrefundable tax credits including 25C and 25D are contingent on tax liability, which is often low or non-existent for low-income households.

 

47. Can a homeowner carry the residential Section 25C and 25D tax credits forward into following years (claim it on a future tax return) if they are not tax liable for the credit amount owed in the year the upgrade occurs?

It depends on the credit. Section 25C tax credits for energy efficient home improvements do not carry forward, but Section 25D tax credits for residential clean energy equipment do carry forward to future years.

48. Are there match requirements?

There are no federal match requirements. Each of the implementing organizations may run different kinds of programs with different requirements.

 

49. Are the GGRF programs administered through state or federal offices? And, if administered through a state agency, is any state legislation or authority required to spend these funds?  

The majority of the funds will not go through states. For two of the three parts of GGRF, EPA will give large grants to several nonprofit organizations. Those organizations will make subgrants or directly provide loans or credit support. The main funds intended for CDFIs (Clean Communities Investment Accelerator (CCIA)) will first go to a small set of nonprofits who will distribute technical and financial assistance to local financial institutions. CDFIs will also be eligible for support from the National Clean Investment Fund (NCIF), which similarly will flow through a couple nonprofits. Program administration will vary among funding streams.

States will only be eligible to directly receive GGRF funds from the $7 billion Solar for All program (SFA). Most states have applied for the competitive funds. The authority required to accept and spend federal grants varies by state.

For additional information, including detailed funding announcements, visit EPA’s Greenhouse Gas Reduction Fund page.

 

50. Can home repairs linked to energy efficiency upgrades be funded through the GHG Reduction Fund?  

Yes, some. While the law does not say anything explicitly about whether GGRF funds may be used for home repairs, EPA does provide some guidance on the matter. Up to 20% of a Solar for All award may be used toward “enabling upgrades” that will support solar deployment, such as structural repairs or energy efficiency improvements.

The Clean Communities Investment Accelerator (CCIA) and the National Clean Investment Fund (NCIF) funds are generally intended for projects that reduce emissions, but the guidance also states that funding may go toward “assisting communities in their efforts to deploy projects, activities, or technologies that reduce or avoid such emissions,” which could include repair work that enables otherwise qualified projects. The details of how the funds are deployed will depend on the EPA award winners.

 

51. How and when will a state know how much funding from the Greenhouse Gas Reduction Fund it will receive? 

It varies. The GGRF is a set of competitive grant programs. Of the total $27 billion available through the fund, only $7 billion will be directly available to states (as well as other eligible applicants) through the Solar for All competition. EPA anticipates notifying awardees in March 2024.

The remaining $20 billion in funding—through the NCIF and CCIA—will be a combination of local and national grants that could finance projects in many states. While those awards also are anticipated in March 2024, how much funding will go to projects in different states will not be clear for some time and may evolve over time.

52. Does “privately owned” include entities that own HUD subsidized properties? Would “privately owned” include properties owned by a nonprofit?

Yes. Generally, any owner of HUD-assisted multifamily buildings, including for-profits, housing agencies, and nonprofits, is eligible for GRRP funding. Importantly, this does not include public housing. Details of eligible programs are in the Notices of Funding Opportunity (NOFOs).

 

53. Would “households” include renters or only owners?

Renters are not eligible, but owners of rental properties are eligible. GRRP is for owners of HUD-assisted multifamily housing. For further eligibility and application details, refer to the HUD NOFOs released on May 11th, 2023.

 

54. Who can access the benchmarking funds and what are they used for?

GRRP applicants in all three cohorts may apply to HUD for direct support or reimbursement of benchmarking costs (up to $2,500 per property). Some GRRP award winners will be required by HUD to submit pre- and post-construction benchmarking data, while others will be required only to submit post-construction benchmarking data. The funding is to collect and input the necessary data.

 

55. Are mobile homes also included?

No. GRRP is intended to serve HUD-assisted multifamily properties. (See HUD’s webpagefor additional details).

 

56. How are rental property owners going to determine if they have met the 25% energy savings? Is this just based on energy bills?

The so-called “Leading Edge” and “Comprehensive” awards require that buildings achieve a minimum of 25% modeled energy use reductions. This will require one full year of pre- and post-project energy use data. Property owners may collect this utility data through a licensed engineer or a qualified professional approved by HUD. Additional details can be found in section 11 of the GRRP notice.