How the Inflation Reduction Act Will Save You Money, Clean Up the Environment and Help Everyone Afford an Electric Car
This is what is being proposed, and how we’ll all benefit.
If this proposed package of legislation passes, it has the potential to be the largest U.S investment ever made into combating climate change. It includes almost $370 billion addressing climate and energy spending on both an individual, family, and corporate level, environmental conservation, deficit reduction, and more affordable access to health care, among other things.
So, what does this all mean to you?
What is the Inflation Reduction Act?
Ultimately, this bill is designed to provide assistance and incentives for both individuals and corporations to move towards clean energy generation, promote adoption of electric cars, reduce consumer energy costs and greenhouse gas emissions at the same time, while hopefully reducing emissions by 40% by 2030.
Achieving this is broken into 5 parts:
- Lowering Consumer Energy Costs
- Promoting American Energy Security and Domestic Manufacturing
- Decarbonizing the Economy
- Investing in Communities and Environmental Justice
- Supporting Farmers, Forestland Owners and Resilient Rural Communities
Related: Why the Chevy Bolt may be the best deal on an electric car right now
Both electric cars and electricity may become more affordable. Photo: Liv Leigh
So how do we Reduce Consumer Energy Costs?
The Inflation Reduction Act, as it’s proposed, aims to reduce energy costs to consumers, with special attention given to low income individuals. There will be $9 billion invested in consumer home energy rebate programs, and a $1 billion grant program to assist with making affordable housing more energy efficient.
Previously, if you purchased an electric car, tax incentives were available when you filed taxes for the year of your EV purchase and were subject to being one of the first 200,000 electric cars sold by each automaker. Now, the incentive applies at time of purchase and there’s no cap, BUT the automakers are required to comply with a ton of stipulations that are aimed to reduce North American dependence on foreign minerals, components, and manufacturing while boosting the economy by bringing more work Stateside.
Related: Everything you need to know about car recalls
GM assembly plant in Michigan. Photo: GM
How does this Promote American Energy Security and Domestic Manufacturing?
$2 billion of the proposed bill will help current auto manufacturing facilities convert to clean vehicle production. This will ease the transition and keep existing jobs safe while establishing more American manufacturing jobs. Over $60 billion will be invested into the full supply chain of American clean energy technology. Ideally, this investment will promote stability in energy pricing and alleviate bottlenecks in the supply chain. $30 billion in incentives will support a ton of U.S. energy manufacturing like solar panels, batteries, wind turbines, and electric vehicles as well as $10 billion towards the actual manufacturing facilities of these clean energies.
Related: The pros and cons of swapping to an electric car
A vast array of solar panels surrounded by a mountainous winter landscape. Photo: Pexels
How does decarbonizing the economy affect you?
Some states have cleaner energy than others. If you’re not able to invest in home solar, then you’re stuck depending on your state to supply clean energy options. In this bill, about $30 billion in grants and loans will help move states towards clean electricity. Focused on reducing emissions, billions in grants and credits will incentivize clean commercial vehicles, such as a proposed $3 billion for the U.S. Postal Service to purchase zero-emission vehicles and $1 billion towards clean garbage trucks and school buses. $27 billion will help accelerate this push and specifically focus on disadvantaged communities, while another $3 billion will address community driven projects in those areas that typically suffer most from the impacts of climate change and pollution.
Various other grants promote equity and access to affordable transportation. This portion of the bill helps reduce the commonly detrimental impact on these areas and makes it easier for everyone to obtain clean energy and experience a healthy environment. Grants and tax credits will support production of biofuels, promote climate-smart farming practices, and help develop fire-resistant forests and healthy agriculture.
Related: Are electric cars actually better for the environment?
Lush farmland and wind turbines coexisting. Photo: Pexels
Supporting Farmers, Forestland Owners, and Resilient Rural Communities
The Inflation Reduction act recognizes that agricultural communities, farmers, and forest owners are a significant piece of a climate solution. Additionally, it wants to support rural communities that will ultimately benefit not just from conservation, but also from new methods of clean energy development.
This means more than $20 billion for agricultural practices that are better for the climate. It also means $5 billion for healthy, fire-resistant forests (reducing wildfires is better not just for our forests, but for cutting down on the air pollution that occurs from them). The $5 billion will also go towards forest conservation and urban tree planting.
There will be tax credits and grants that will go towards the development of biofuels that will be produced here in the U.S. Another objective of the credits and grants will be to produce sustainable aviation fuels, and the infrastructure needed to do so.
Lastly, there will be $2.6 billion dedicated to the conservation and protection of coastal habitats and the communities that depend on them.
So, what does this all mean for you?
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- You will gain access to tax credits towards investing in home solar, electric HVAC, heat pumps, and water heaters.
- There will be incentives to buy energy efficient electric appliances.
- You could snag consumer rebates towards home energy efficiency
- Potential savings on New Electric Cars:
- If you have a household adjusted gross income of less than $300,000 or individual income of less than $150,000 then you may be eligible for up to $7,500 electric vehicle tax credit at the time of purchase of an electric car or sedan priced $55,000 or less, or an electric truck, SUV, or van priced at $80,000 or below. (As long as the manufacturer complies with the new federal requirements)
- Potential savings on Used Electric Cars:
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- If you have a household adjusted gross income of less than $150,000 or individual income of less than $75,000 then you may be eligible for up to $4,000 tax credit at the time of purchase of a used electric vehicle older than 2 years and priced at $25,000 or less. (As long as the manufacturer complies with the new federal requirements)
- You may see lower energy bills and health care costs in the future.
Keep in mind that the Inflation Reduction Act of 2022 still needs to be passed in the Senate and the House and, even if it passes, the specifics may not remain the same. Hopefully we can still look forward to a proactive response to climate change and lots of assistance with transitioning to electric cars!
