In 2023, 3.4 million American families saved $8.4 billion on clean energy and energy efficiency investments
WASHINGTON – Today, in advance of the two-year anniversary of the Inflation Reduction Act, the U.S. Department of the Treasury (Treasury) released new data from the IRS and new analysis by the Office of Economic Policy showing that more than 3.4 million American families benefitted from $8.4 billion in tax credits to lower the costs of clean energy and energy efficiency upgrades to their homes during 2023. Today’s announcement marks the first public release of data from 2023 tax filings showing the benefit of the Inflation Reduction Act’s clean energy tax incentives for consumers.
The number of families benefiting from these expanded credits for investments that lower their utility bills increased almost one third compared to tax year 2021, prior to passage of the Inflation Reduction Act, and the aggregate value of the credits increased by almost two thirds. The new data shows the Inflation Reduction Act is achieving its goal to lower both the upfront cost of clean energy and energy efficiency investments and monthly utility bills for American families.
In addition to upfront cost savings on home improvements, consumers will save on their energy bills for years to come. Recent research from U.S. national labs and analysis from Treasury’s Office of Economic Policy shows that after consumers adopt these upgrades, they can save hundreds or thousands of dollars per year on their utility bills, depending on the upgrades made to their homes. For example, household installing residential solar have saved a median of $2,230 annually, and households that install efficient heat pumps and improve building efficiency are expected to save up to $600, $1,200, or $3,100 per year, based on the type of heating and cooling system that is being replaced.
“The Biden-Harris Administration’s top economic priority is lowering costs for American families, and the Inflation Reduction Act is advancing that goal by making home energy upgrades more affordable and cutting monthly utility bills,” said U.S. Secretary of the Treasury Janet L. Yellen. “The law has lowered the cost of clean energy upgrades for more than 3.4 million American families, saving them hundreds, if not thousands, of dollars annually on their utility bills for many years to come.”
American families have claimed more than $6 billion in credits for residential clean energy investments on 2023 tax returns filed and processed through May 23, 2024. This credit helps families afford investments in solar electricity generation, solar water heating, and battery storage, among others. Families have also claimed more than $2 billion for energy efficient home improvements—which include heat pumps, efficient air conditioners, insulation, windows, and doors—during the same time span. These estimates are expected to increase as additional returns are filed and processed.
Home Clean Energy Investments
- More than 750,000 families claimed investments in residential solar electricity.
Home Energy Efficiency Investments
- More than 250,000 families claimed investments in electric or natural gas heat pumps.
- More than 100,000 families claimed investments in heat pump water heaters.
- Nearly 700,000 families claimed investments in insulation and air sealing.
Background
The Inflation Reduction Act provides incentives for consumers to lower their energy bills and shield themselves from future spikes in fossil energy prices. The Inflation Reduction Act:
- Extended and expanded the Energy Efficient Home Improvement Credit, providing a total credit of up to $1,200 annually for investments like installing insulation or efficient windows and doors, with a special credit of as much as $2,000 for electric heat pumps that provide super-efficient heating and cooling, including a $150 credit for a home energy audit conducted by an inspector to help determine the best home improvement options.
- Extended the Residential Clean Energy Credit, ensuring that households will be able to continue receiving a tax credit to cover up to 30% of the costs of installing, among others, rooftop solar and battery storage through 2034.
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