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A practical guide to using the climate law to get cheaper solar panels, heat pumps, and more.
Today marks the one year anniversary of the Inflation Reduction Act, the biggest investment in tackling climate change the United States has ever made. The law consists of dozens of subsidies to help individuals, households, and businesses adopt clean energy technologies. Many of these solutions will also help people save money on their energy bills, reduce pollution, and improve their resilience to disasters.
But understanding how much funding is available for what, and how to get it, can be pretty confusing. Many Americans are not even aware that these programs exist. A poll conducted by The Washington Post and the University of Maryland in late July found that about 66% of Americans say they have heard “little” or “nothing at all” about the law’s incentives for installing rooftop solar panels, and 77% have heard little or nothing about subsidies for heat pumps. This tracks similar polling that Heatmap conducted last winter, suggesting not much has changed since then.
Below is Heatmap’s guide to the IRA’s incentives for cutting your carbon footprint at home. If you haven’t heard much about how the IRA can help you decarbonize your life, this guide is for you. If you have heard about the available subsidies, but aren’t sure how much they are worth or where to begin, I’ll walk you through it. (And if you’re looking for information about the electric vehicle tax credit, my colleague at Heatmap Robinson Meyer has you covered with this buyer’s guide.)
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There’s funding for almost every solution you can think of to make your home more energy efficient and reduce your fossil fuel use, whether you want to install solar panels, insulate your attic, replace your windows, or buy electric appliances. If you need new wiring or an electrical panel upgrade before you can get heat pumps or solar panels, there’s some money available for that, too.
The IRA created two types of incentives for home energy efficiency improvements: Unlimited tax credits that will lower the amount you owe when you file your taxes, and $8.8 billion in rebates that function as up-front discounts or post-installation refunds on equipment and services.
The tax credits are available now, but the rebates are not. The latter will be administered by states, which must apply for funding and create programs before the money can go out. The Biden administration began accepting applications at the end of July and expects states to begin rolling out their programs later this year or early next.
The home tax credits are available to everyone that owes taxes. The rebates, however, will have income restrictions (more on this later).
“The Inflation Reduction Act is not a limited time offer,” according to Ari Matusiak, the CEO of the nonprofit advocacy group Rewiring America. The rebate programs will only be available until the money runs out, but, again, none of them have started yet. Meanwhile, there’s no limit on how many people can claim the tax credits, and they’ll be available for at least the next decade. That means you don’t need to rush and replace your hot water heater if you have one that works fine. But when it does break down, you’ll have help paying for a replacement.
You might want to hold off on buying new appliances or getting insulation — basically any improvements inside your house. There are tax credits available for a lot of this stuff right now, but you’ll likely be able to stack them with rebates in the future.
However, if you’re thinking of installing solar panels on your roof or getting a backup battery system, there’s no need to wait. The rebates will not cover those technologies.
A few other caveats: There’s a good chance your state, city, or utility already offers rebates or other incentives for many of these solutions. Check with your state’s energy office or your utility to find out what’s available. Also, it can take months to get quotes and line up contractors to get this kind of work done. If you want to be ready when the rebates hit, it’s probably a good idea to do some of the legwork now.
If you do nothing else this year, consider getting a professional home energy audit. This will cost several hundred dollars, depending on where you live, but you’ll be able to get 30% off or up to $150 back under the IRA’s home improvement tax credit. Doing an audit will help you figure out which solutions will give you the biggest bang for your buck, and how to prioritize them once more funding becomes available. The auditor might even be able to explain all of the existing local rebate programs you’re eligible for.
The Internal Revenue Service will allow you to work with any home energy auditor until the end of this year, but beginning in 2024, you must hire an auditor with specific qualifications in order to claim the credit.
Let’s start with what’s inside your home. In addition to an energy audit, the Energy Efficiency Home Improvement Credit offers consumers 30% off the cost (after any other subsidies, and excluding labor) of Energy Star-rated windows and doors, insulation, and air sealing.
There’s a maximum amount you can claim for each type of equipment each year:
$600 for windows
$500 for doors
$1,200 for air sealing and insulation
The Energy Efficiency Home Improvement Credit also covers heat pumps, heat pump water heaters, and electrical panel upgrades, including the cost of installation for those systems. You can get:
$2,000 for heat pumps
$600 for a new electrical panel
Yes, homeowners can only claim up to $3,200 per year under this program until 2032.
Also, one downside to the Energy Efficiency Home Improvement Credit is that it does not carry over. If you spend enough on efficiency to qualify for the full $3,200 in a given year, but you only owe the federal government $2,000 for the year, your bill will go to zero and you will miss out on the remaining $1,200 credit. So it could be worth your while to spread the work out.
The other big consumer-oriented tax credit, the Residential Clean Energy Credit, offers homeowners 30% off the cost of solar panels and solar water heaters. It also covers battery systems, which store energy from the grid or from your solar panels that you can use when there’s a blackout, or sell back to your utility when the grid needs more power.
The subsidy has no limits, so if you spend $35,000 on solar panels and battery storage, including labor, you’ll be eligible for the full 30% refund, or $10,500. The credit can also be rolled over, so if your tax liability that year is only $5,000, you’ll be able to claim more of it the following year, and continue doing so until you’ve received the full value.
Geothermal heating systems are also covered under this credit. (Geothermal heat pumps work similarly to regular heat pumps, but they use the ground as a source and sink for heat, rather than the ambient air.)
Here’s what we know right now. The IRA funded two rebate programs. One, known as the Home Energy Performance-Based Whole House Rebates, will provide discounts to homeowners and landlords based on the amount of energy a home upgrade is predicted to save.
Congress did not specify which energy-saving measures qualify — that’s something state energy offices will decide when they design their programs. But it did cap the total amount each household could receive, based on income. For example, if your household earns under 80% of the area median income, and you make improvements that cut your energy use by 35%, you’ll be eligible for up to $8,000. If your household earns more than that, you can get up to $4,000.
There’s also the High-Efficiency Electric Home Rebate Program, which will provide discounts on specific electric appliances like heat pumps, an induction stove, and an electric clothes dryer, as well as a new electrical panel and wiring. Individual households can get up to $14,000 in discounts under this program, although there are caps on how much is available for each piece of equipment. This money will only be available to low- and moderate-income households, or those earning under 150% of the area median income.
Renters with a household income below 150% of the area median income qualify for rebates on appliances that they should be able to install without permission from their landlords, and that they can take with them if they move. For example, portable appliances like tabletop induction burners, clothes dryers, and window-unit heat pumps are all eligible for rebates.
It’s also worth noting that there is a lot of funding available for multifamily building owners. If you have a good relationship with your landlord, you might want to talk to them about the opportunity to make lasting investments in their property. Under the performance-based rebates program, apartment building owners can get up to $400,000 for energy efficiency projects.
For the most part, yes. But the calculus gets tricky when it comes to heat pumps.
Experts generally agree that no matter where you live, switching from an oil or propane-burning heating system or electric resistance heaters to heat pumps will lower your energy bills. Not so if you’re switching over from natural gas.
Electric heat pumps are three to four times more efficient than natural gas heating systems, but electricity is so much more expensive than gas in some parts of the country that switching from gas to a heat pump can increase your overall bills a bit. Especially if you also electrify your water heater, stove, and clothes dryer.
That being said, Rewiring America estimates that switching from gas to a heat pump will lower bills for about 60% of households. Many utilities offer tools that will help you calculate your bills if you make the switch.
The good news is that all the measures I’ve discussed in this article are expected to cut carbon emissions and pollution, even if most of your region’s electricity still comes from fossil fuels. For some, that might be worth the monthly premium.
Tax Credit #1 offers 30% off the cost of energy audits, windows, doors, insulation, air sealing, heat pumps, electrical panels, with a $3200-per-year allowance and individual item limits.
Tax Credit #2 offers 30% off the cost of solar panels, solar water heaters, batteries, and geothermal heating systems.
Rebate Program #1 will offer discounts on whole-home efficiency upgrades depending on how much they reduce your energy use, with an $8,000 cap for lower-income families and a $4,000 cap for everyone else.
Rebate Program #2 is only for low- and moderate- income households, and will offer discounts on specific electric appliances, with a $14,000 cap.
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The Trump administration just did something surprising: It paved the way for a transmission line to a solar energy project.
On Friday, the Bureau of Land Management approved the Gen-Tie transmission line and associated facilities for the Sapphire Solar project, a solar farm sited on private lands in Riverside County, California, that will provide an estimated 117 megawatts to the Southern California Public Power Authority.
It is the first sign so far that some renewable energy requiring federal lands may be allowed to develop during the next four years, and is an about-face from the first weeks of Trump’s presidency.
BLM notably said the solar project’s transmission line will help “Unleash American Energy” (the bureau’s capitalization, not mine). And it said the move “aligns with” Trump’s executive order declaring a national energy emergency — which discussed only fossil fuels, nuclear, and hydropower — because it was “supporting the integrity of the electric grid while creating jobs and economic prosperity for Americans.”
“The Bureau of Land Management supports American Energy Dominance that prioritizes needs of American families and businesses,” BLM California State Director Joe Stout said in a statement provided via press release.
Another executive order Trump issued on his first day back in office paused solar and wind project permitting for at least 60 days, leading to a halt on government activities required to construct and operate renewable energy projects. It’s unclear whether these actions to move Sapphire’s transmission line through agency review means the federal permitting pipes are finally unstuck for the solar industry, or if this is an exception to the rule — especially because the pause Trump ordered has yet to hit the expiration date he set on the calendar.
Last time around they were bulwarks for climate action. This time is different.
This story is part of a Heatmap series on the “green freeze” under Trump.
Following Donald Trump’s election in November, climate advocates self-soothed with the conviction that cities and states would continue carrying the banner in the absence of federal climate action. That’s what happened during Trump’s first presidency, after all. When he pulled the U.S. out of the Paris Agreement in 2017, hundreds of local governments declared they were “still in” on climate, and a new wave of state and local climate policies swept the country.
By the time Biden stepped into the White House four years later, many of these communities had climate plans either in place or in progress. When his administration passed the Infrastructure Investment and Jobs Act and the Inflation Reduction Act, setting aside billions of dollars for emissions reduction and climate adaptation projects, they were in a prime position to apply for funding. By November 2024, with most of that money doled out, it was easy to imagine how climate-forward cities could forge ahead, seeded by grants, regardless of what Trump did.
Except then Trump did the thing that many assumed he would not — because he legally could not — do. He froze and is now trying to claw back congressionally appropriated, contractually obligated funds. And in so doing, he has thrown the prospects for cities as a last line of defense into question.
“In this administration, it’s a lot more chaotic,” Barbara Buffaloe, the mayor of Columbia, Missouri, told me. “There’s a lot more happening than I feel like there was in 2017, right at the get-go. Nobody knows what the universe is right now.”
Columbia was among those that joined the “still in” campaign in 2017. It adopted emissions reduction goals in 2018, and passed a climate action and adaptation plan in 2019. The Biden administration awarded the city more than $28 million across three separate federal grants to build electric vehicle charging stations, make electrical upgrades that would allow it to charge electric buses, and redesign its central business loop to be more walkable, bikeable, and safe.
All three of those grants are now up in the air. Buffaloe said she was told by state partners that the $2.1 million business loop planning grant from the Department of Transportation’s Reconnecting Communities program was paused. Columbia was the only city in Missouri to get a Charging and Fueling Infrastructure Grant from the DOT, with the $3.6 million supposed to help pay for EV chargers at the library and the airport. The city is moving ahead with initial activities like environmental reviews and preliminary engineering in the hope that funds to build the actual stations will be unfrozen by the time it’s ready to break ground. Regarding the $23 million bus infrastructure grant, part of a separate DOT program, she said the city hasn’t heard from its grant managers in about a month.
“We don’t know whether or not to continue on the projects,” she told me. “It’s that feeling of uncertainty and trepidation that is causing us the most anxiety. Our construction window is not year-round in Columbia, and because we’re a public institution, it takes a lot longer for us to put out bids and to start projects. We need to know if we have this budget or not.”
It’s not just the funding freeze leaving Columbia in a holding pattern. The city has a municipally-owned electric utility that had been looking to take advantage of “direct pay,” an option for nonprofit entities with no tax liability to collect federal renewable energy incentives as direct subsidies, to help it build more solar farms. But now Republicans in Congress are considering eliminating direct pay.
The funding freeze has put a lot of cities in this position where time-sensitive decisions are stalled. Hundreds of communities were awarded grants from the U.S. Department of Agriculture program to fund tree-planting for carbon mitigation and shade creation, for example. Some recipients have been told their grants were canceled altogether, others are still in the dark — their federal grant managers have been fired and no one is responding to their emails.
“They’re kind of at this point of, hey, do we put in the order for trees? We need to plant at certain times of the year,” Laura Jay, the deputy director of Climate Mayors, a national network of mayors working to address climate change, told me. “For a lot of these cities and programs, there’s key decisions that they have to be making, and when there’s uncertainty around it, it puts the city at a huge risk.” There’s financial risk, she said, in terms of spending money without knowing if it will get reimbursed, but also planning risks. A number of cities were awarded grants to purchase electric school buses, for example, and they need to make sure they are going to have enough to get kids to school.
As a larger, wealthier city, Columbia is in a better position than others. It collects revenue through a capital improvement tax that Buffaloe said could be used for climate projects. “We’ll do as much as we can,” she told me.
But in more rural areas, these grants represented a rare opportunity to modernize and build more equitable access to infrastructure.
“We’re in Southeast Ohio, which traditionally has been left behind when it comes to larger infrastructure projects,” Andrew Chiki, the deputy service-safety director in Athens, Ohio, told me. “We don’t have an interstate highway.”
Chiki helped lead a regional effort to apply for a Charging and Fueling Infrastructure Grant, the same program Columbia won funding from that is now frozen. He and his partners were awarded $12.5 million to build a corridor of electric vehicle chargers in 16 communities between Athens and Dayton. “One of our attempts with this was to answer the question, if EV adoption takes off the way that we are envisioning, how do we allow an on-ramp for communities that are already disadvantaged to be able to adopt?”
Chiki said they were still waiting to hear whether they could move forward with the project or not. Athens passed a resolution declaring a climate emergency in 2020, and adopted a target to reduce emissions by 50% over 10 years. The city has made some strides, Chiki said, by making buildings more energy efficient and installing solar on city-owned facilities. “We are still committed to doing as much as we can,” he told me.
But if the EV charging grant falls through, the smaller villages and towns between Athens and Dayton that don’t have the staff resources or capacity to apply for these types of grants will lose out, he said. “We would probably look at other types of funding sources, but it would make it incredibly difficult and not be nearly as broad as we want.”
There are some pots of money for local climate projects that have flown under the Trump administration’s radar. Last year, the South Florida ClimateReady Tech Hub, a consortium of local governments, schools, labor groups, and companies working to accelerate the development of climate technologies, won a $19.5 million grant from the Department of Commerce’s Economic Development Administration. The money came from the Biden-era CHIPS and Science Act, a law that Trump is pushing Congress to scrap but that Republicans have thus far defended. Tech Hub will use the funds to scale low-emissions cement that can be used for adaptation projects, energy efficiency, and workforce development, among other things.
Francesca Covey, the chief innovation and economic development officer for Miami-Dade County and regional innovation officer for the Tech Hub, told me the group has continued to have quarterly check-ins with federal partners and haven’t gotten any signal that the funding is in jeopardy. “It’s really been more business as usual,” she said. Covey also mentioned two pilot projects to build artificial reefs and seawalls in the area that had funding from the Department of Defense and were moving forward.
Still, the Tech Hub has adjusted its language to stay competitive in the new political environment. The group changed its name to the Risk and Resilience Tech Hub two weeks ago, Covey told me. “We wanted to underscore the economic imperative of the work,” she said, when I asked what motivated the name change. “Right now we’re finding that where we are getting the best traction with the private and public community is around risk. We wanted to make sure we were couching it in the right way.”
Ithaca, New York, on the other hand, which passed its own Green New Deal in 2019, is committed to its climate and equity-centric messaging. “We are not intending to change the narrative around what we’re doing,” Rebecca Evans, the city’s sustainability director, told me. “It’s still clean energy, and it is still because climate change is a threat to human existence. We are still going to prioritize black and brown populations and populations that experience poverty at various levels because they are most vulnerable to climate change.”
About 85% of Evans’ Green New Deal budget comes from federal sources, and at first she worried that was all at risk. In 2022 and 2023, Ithaca had received funding from what’s called “congressional directed spending,” or “earmarks,” in two federal appropriations bills, meaning that New York state lawmakers fought to get money set aside for the city. The first grant, worth $1 million, was for a hydrogen production and fueling project. The second, worth $1.5 million, was for a wide-ranging program to decarbonize the school system and enhance a local workforce development program to include new energy efficiency certifications. Both programs included explicit diversity, equity, and inclusion-related objectives, so Evans assumed they would be targeted by the Trump administration.
But on Tuesday, she was told by federal partners on the hydrogen grant that congressionally directed spending was not subject to Trump’s executive orders and got the greenlight to move into the next phase. Evans still hasn’t heard back from her federal partners on the second grant, but she’s more hopeful now that it will move forward.
Back when I first spoke to Evans, when things were more up in the air, she told me she worried that the Trump administration’s actions would cause advocates to lose hope. “I think anger can be a positive thing, but it’s the loss of hope, even if it’s marginal, that is truly, truly dangerous to this movement.”
Perhaps that’s why Evans, like all of the other local leaders I spoke with, projected optimism when I asked what they could accomplish over the next four years without federal support. She was already trying to find the money elsewhere, she said. “We can’t do all of the amazing things that we wanted to do, but we can still make progress,” she said.
“Cities are incredibly nimble and innovative,” Jay, of Climate Mayors, told me. “I think that they’re eager to and committed to keeping the work going. What that looks like, I think, is hard to figure out right now, because everyone’s kind of caught in the chaos of trying to figure out if they still have this funding or not. But they’re fully committed to making sure that this work is continuing.”
Combined with other EVs the company unveiled this week, it looks like the world’s largest automaker is finally getting its electric act together.
If you believe solely in the power of the stock market, then the world’s most important automaker is Tesla, whose soaring stock valuation reflects faith in Elon Musk and his AI dreams as much as it does the company’s EV sales. But if you care about selling cars, the real most important company is Toyota. The world’s largest automaker delivers more than 10 million vehicles per year, twice the sales of even a giant like General Motors.
The Japanese leader has a complicated relationship with sustainability. Toyota became the world’s signature crunchy car-maker with the introduction and success of the hybrid Prius. It still sells the Mirai, one of the only hydrogen fuel cell cars on the market. But Toyota has also always been reticent about EVs, standing on the sidelines while other legacy automakers rushed in with electric offerings, with its leadership expressing consistent skepticism about the advent of the EV era.
That is seemingly about to change, as the automaker appears ready to stop dragging its feel on full battery power. Toyota teased a few nuggets of important EV news over the past few weeks, And although its nine planned EVs by the end of 2026 are meant for Europe, this is a crucial window into the big brand’s plans.
First: Its initial foray into the pure EV space, the bZ4x, is getting an overdue upgrade. The awkwardly named crossover has been one of the more disappointing electric vehicles on the market, with just 214 horsepower. Its range, which starts around 220 miles and only goes as high as 250, isn’t up to the standards of today’s best EVs. The new version, however, pumps up the output to 343 horses, while also extending maximum range for the American version to around 280 miles. It finally adds simple, obvious features such as integrating charging stops into the in-car navigation system, making Toyota’s EV far more competitive with the state of the art.
The company has also promised, at long last, a deeper lineup of fully electric vehicles set to debut this year and in 2026. First is the C-HR+, a fully electrified version of the quirky little Toyota crossover that was briefly on sale in the United States until it was discontinued in 2022. (I test-drove one once and it was fun, if awkwardly proportioned.) C-HR+ would be the entry-level Toyota EV, with specs similar to the bZ4x but in a smaller and slightly less expensive package.
Then there’s the Urban Cruiser, which fits between the C-HR+ and bZ4x in terms of size. This EV is the spiritual successor to the Scion xD that was sold in America back before Toyota discontinued the Scion sub-brand here. The Urban Cruiser is set to go on sale only in Europe, at least for now. Specs like its driving range are not yet known.
The rest of Toyota’s EV plans lie in the shadows. In addition to the three models it revealed fully, the company also presented a slide that teased six more, depicted only by a faint outline. That’s standard practice in the car world, meant to drum up intrigue about cars yet to come. Tesla, for example, fed years of rumors about a small, entry-level EV that (to date, at least) never showed up by showing it under a sheet in various media presentations.
What’s noticeable about Toyota’s tease? There’s a truck.
Toyota has toyed with making an electric pickup before. In 2023, its engineers built a prototype EV version of the small Hilux truck Toyota sells in huge numbers around the world. That one-off became a real production EV, though only in Thailand and packs just 124 miles of range.
The design Toyota just teased looks like an extended-cab American pickup truck, not the single-row small truck is sells elsewhere. This leads to obvious speculation that Toyota might finally be electrifying the Tacoma and aiming to compete with the likes of Ford, Chevy, Rivian, and Ram, a move that would be a jolt to the sluggish market for EV trucks.
Although Toyota is late to the game — and its participation earlier would have done a lot to juice EV adoption — these moves are crucial. For one thing, the timing is interesting. The giant company’s much-awaited dive into EVs just as the United States government is putting the squeeze on them is further proof that the global market for electric vehicles isn’t going anywhere. We already know that enthusiasm for EVs is hotter in other countries, and Toyota sells cars everywhere.
And who knows? With Elon Musk flailing in the political winds, throwing away Tesla’s huge lead in various EV markets for no particular reason, maybe Toyota finally saw its moment to strike.