Take advantage of these tax credits before Congress kills them » Yale Climate Connections

Republicans in the U.S. Senate are working to pass their version of the budget reconciliation bill before Congress goes on holiday for July 4. As it stands, the bill would terminate most clean energy tax credits long before their original phase-out date in 2032.

The tax credits, which include money back on electric cars, electric appliances, energy efficiency improvements, and more, have a lot of public support. In a December 2024 survey, researchers at the Yale Program on Climate Change Communication, the publisher of this site, found that 91% of liberal Democrats, 70% of moderate or conservative Democrats, 42% of liberal or moderate Republicans, and 28% of conservative Republicans support tax rebates for electric vehicles. A Yale Climate Connections analysis found that red states stood to benefit the most from the law’s incentives to individuals and businesses. 

Some hoped that the Senate would save tax credits that the Republican-controlled House of Representatives proposed cutting in their version of the budget bill that passed in May, but that has not been the case for consumer tax credits for EVs or home improvements. That said, senators have not yet voted on the bill, and because the Senate made substantial changes, the bill will need to return to the House before heading to President Donald Trump’s desk for his signature. So there is still time for constituents to let members of Congress know their thoughts about the proposed legislation.

Read: 13 tips for lobbying your elected officials about climate change

If the Senate version of the bill does become law as-is, the credits won’t expire immediately. For the most part, consumers will have 180 days to take advantage of the credits before they’re fully terminated. 

Replace your combustion engine car with a new or used EV

As the bill currently exists in the Senate, EV tax credits would expire either 90 (for used cars) or 180 days (for new cars) after the bill becomes law. That means there’s still time to get up to $4,000 in the form of a tax credit for a used EV and $7,500 for a new one.

Read: Don’t get fooled: Electric vehicles really are better for the climate

The clean vehicle credit is worth $7,500 and applies to new vehicles that:

• Are electric vehicles with batteries of at least seven kilowatt-hours or are hydrogen fuel cell vehicles
• Cost less than $80,000 for vans, SUVs, and pickup trucks, or under $55,000 for all other vehicles
• Completed assembly in the U.S., Canada, or Mexico. 
• Meet requirements related to where battery components are manufactured and the source of critical minerals used in the batteries. 

To qualify for the tax credit, the adjusted gross income of the person or people purchasing the car must be under $300,000 if their tax status is married filing jointly, under $225,000 for head of household status, or under $150,000 for single or married filing separately status.

If you’re interested in buying a used car, similar restrictions apply — but with lower income and vehicle cost thresholds. Your adjusted gross income must be under $150,000 if your tax status is married filing jointly, or under $75,000 if your filing status is single or married filing separately.

For a vehicle to qualify for the credit for previously owned clean vehicles, it must also:

• Meet the requirements for a clean vehicle used in the clean vehicle credit
• Have a model year at least two years earlier than the date of sale
• Weigh less than 14,000 pounds
• Cost less than $25,000.

This credit is for either $4,000 or 30% of the cost of the vehicle, whichever is smaller.

If you own a business or nonprofit, you might also want to consider buying an EV for that organization. The commercial clean vehicles credit gives businesses and tax-exempt organizations (like churches, universities, and other nonprofits) money back for purchasing a qualified vehicle. Businesses can get a $7,500 credit for a small vehicle or up to $40,000 for a large vehicle like a school bus or semitruck.

Put an EV charging station in your home or small business

Currently, the alternative fuel vehicle refueling property credit allows individuals and businesses that install EV charging stations to get up to 30% (up to a maximum of $1,000 for individuals and $100,000 for businesses) off the cost of the project in the form of tax credits. The Senate bill would kill this credit, and if passed, the credit would end one year from the passage date.

Improve your home’s energy efficiency with new windows, insulation, and doors

Currently, the energy efficient home improvement credit gives homeowners who make qualifying purchases like energy efficient windows, home energy audits, heat pumps, and a tax credit worth 30% of the cost up to $1,200 for energy-efficient property costs and certain energy-efficient home improvements. The cap resets each year, which will be handy if the tax credit manages to survive into 2026. The bill would terminate the credits 180 days after the bill passes. 

Energy audit

Home energy audits help you understand how much energy your home uses and improvements that can reduce that use. The energy-efficient home improvement tax credit will help cover the cost of home energy audits. The credit covers 30% of the cost of a home energy audit and is capped at $150.

“A home energy assessment should be your first step before making energy-saving home improvements, as well as before adding a renewable energy system to your home,” according to the U.S. Department of Energy.

New wiring

The tax credit also applies to rewiring if you have an older home that isn’t prepared to support new electric appliances. Contact a trusted electrician or contractor and tell them that you’re hoping to replace your gas furnace or other appliances with their electricity-based equivalents in the near future. Ask if those upgrades will require a new electric panel or wiring. 

Improve insulation in your home

A well-insulated home stays warmer in the winter and cooler in the summer. Improving your home’s insulation reduces your heating and cooling needs, potentially enabling you to purchase a smaller, cheaper rooftop solar system if you go that route.

New windows and exterior doors

With the tax credit, homeowners can get up to $250 back per exterior door ($500 total), and $600 total back for exterior windows and skylights.

Replace your furnace, AC, and water heater with a heat pump

Heat pumps can both cool and heat your home. In the summer, they pull heat from the air of your home and move it outside. In the winter, they pull heat from the outdoor air into your home to warm it. Heat pumps are more energy-efficient than conventional air conditioning or heating, and they run on electricity rather than natural gas or oil. 

Homeowners can receive up to $2,000 per year for qualified heat pumps, water heaters, biomass stoves, or biomass boilers. This $2,000 is separate from the $1,200 cap on other home improvements.

Several different kinds of heat pumps are available, so work with your contractor or energy efficiency professionals to determine which type makes the most sense for your climate and living situation.

Get a renewable energy system to power your home

Not every home is suitable for a renewable energy system, but if your property can support one, the residential clean energy credit can help you pay for it — for now. Systems that qualify for the credit include:

• Home solar
• Qualified battery storage
• Solar water heating
• Fuel cells
• Geothermal heat pumps
• Small wind energy

The residential clean energy tax credit amount is 30% of the cost of a qualifying system, including installation. As written by the Senate, this credit would expire 180 days after the bill is passed.

Savings will ripple through energy bills

In order to get these tax credits before they’re terminated, consumers will have to pony up large amounts of money on short notice. But in addition to getting money back on taxes, more efficient homes and cars can lead to savings on energy bills. Congress’ budget reconciliation bill, as written, is predicted to increase energy costs as the once-booming renewable energy industry faces cancelled investments and projects. For consumers who can afford it, the next few months might just be the best time to make energy efficiency investments.

Read: 10 ways that Trump’s tax bill would undermine his energy promises