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Clean Energy Incentives

The Inflation Reduction Act: what you need to know

RESOURCES TO SAVE YOU MONEY AND ENERGY

At CERTs we share tools and resources to keep you informed on how to save energy and money with energy efficiency methods and renewable energy options. The Inflation Reduction Act of 2022 will make it easier than ever before to save money and energy, and we want to help you navigate the incentives. 

As new clean energy incentives arrive, we will update this page including date-stamps within each section, as well as share the new information in our Energy Stories newsletter. Sign up to stay on top of the updates!

Questions? Feedback? Let us know!

Clean Energy Clips | Inflation Reduction Act

Become an Inflation Reduction Act Ambassador

Interested in sharing resources, like these videos, with your community?

We created slide decks and scripts so you can create your own Inflation Reduction Act presentation, or share alongside the above videos. Access these resources on the Ambassador Toolkit page and help us spread the word so all Minnesotans can benefit from the clean energy incentives within the Inflation Reduction Act. 

Inflation Reduction Act Ambassador Toolkit 

What residents need to know about...

NEW VEHICLE FEDERAL TAX CREDIT

You may qualify for a credit up to $7,500 if you buy a new, qualified plug-in EV or fuel cell electric vehicle. Your modified adjusted gross income may not exceed:

  • $300,000 for married couples filing jointly 
  • $225,000 for heads of households
  • $150,000 for all other filers

April 2023 Update: new critical mineral and battery component requirements must be met in order to qualify for the full $7,500:

  • $3,750 if the vehicle meets the critical minerals requirement only.
  • $3,750 if the vehicle meets the battery components requirement only.
  • $7,500 if the vehicle meets both.

Find which new vehicles are eligible.

USED VEHICLE FEDERAL TAX CREDIT

You may qualify for the Used Clean Vehicle Credit, a tax credit up to $4,000 for qualified, previously-owned clean vehicles purchased on or after January 1, 2023.

Find which pre-owned vehicles are eligible.

MORE RESOURCES

Visit the Department of Energy Savings Hub for Drivers for more information on clean vehicle incentives and eligibility.

Visit CERTs Guide to EVs

Updated 5/1/2023

Households can capture a 30% tax credit, of up to $150 for a home energy audit. 

Depending upon your local utility, Minnesotans can access a few different energy assessments. CenterPoint Energy and Xcel Energy customers can work with Home Energy Squad for an assessment. Income-eligible households can get these assessments for free.

In addition, if you are a Minnesota Energy Resources natural gas customer, you can request a whole home audit. 

NOTE to receive Residential Energy Tax Credits you'll submit IRS Form 5695 when filling your 2023-2032 taxes, if you meet the requirements detailed on IRS.gov.

Learn more about Energy Audits and Benchmarking

Updated 5/1/2023

Beginning now, in 2023 through 2032: The overall total limit for an efficiency tax credit in one year is $3,200. 

This breaks down to an annual limit of $1,200 for any combination of home envelope improvements (windows/doors/skylights, insulation, electrical) plus eligible furnaces, boilers and central air conditioners.  

Any combination of heat pumps, heat pump water heaters, and biomass stoves/boilers are subject to an annual total limit of $2,000.

NOTE to receive Residential Energy Tax Credits you'll submit IRS Form 5695 when filling your 2023-2032 taxes, if you meet the requirements detailed on IRS.gov.

MORE TAX CREDIT RESOURCES

Updated 5/1/2023

Guidance on how home energy rebates will be implemented isn't expected until late 2023.

Home Owner Managing Energy Savings (HOMES) rebate program that low- and moderate-income households will be able to access for rebates. These will be based on the estimated energy savings from energy updates, and will be doubled for households with low income. 

High Efficiency Electric Home Rebate Program (HEEHRA) will provide point-of-sales rebates for qualified electrification projects for low- or moderate-income households. Up to $14,000 in rebates per household will be available. Rebates anticipated include:

 Electric Load Service Center upgrades/Breaker box  $4,000
 Electric Stove, Cooktop, Range, and/or Oven  $840
 Electric Wiring  $2,500
 Heat Pump Clothes Dryers  $840
 Heat Pump Heating/Cooling  $8,000
 Heat Pump Water Heaters  $1,750
 Weatherization (Insulation, Air Sealing, Ventilation)  $1,600
  • A low- or moderate-income household is one where an individual or family which has a total annual income less than 150 percent of the median income of the area in which the individual or family resides. 
  • Home electrification rebates may cover up to 100% of a total qualified electrification project’s cost for households with a total annual income less than 80 percent of the area median income. 

Visit ENERGY STAR's rebate finder for current rebates.

Visit the U.S. Department of Housing and Urban Development's online tool to determine household income categories.

Updated 2/15/2023

Tax credit of up to 30% of the cost for purchase (between Jan. 1, 2023 and Dec. 31, 2032) and installation of a heat pump, up to $2000. Visit Air Source Heat Pump Tax Credit for eligible products and credit details.

In addition, there will be a new point-of-sale rebate for people earning up to 150% of area median income that will apply to heat pumps, heat pump water heaters, and heat pump clothes dryers. The rebate has a $14,000 cap.

Visit the ENERGY STAR Rebate Finder.

NOTE to receive Residential Energy Tax Credits you'll submit IRS Form 5695 when filling your 2023-2032 taxes, if you meet the requirements detailed on IRS.gov.

Learn more about Heat Pumps

Updated 5/1/2023

30% tax credit for any project advanced in 2022 and will apply to projects through 2032. Projects with battery storage connected to and powered by solar also qualify.

As of 2023: Standalone residential energy storage systems >3kW in capacity will also qualify for a 30% tax credit (they do not need to be connected to/powered by solar). 

Visit the Homeowner's Guide to the Federal Tax Credit for Solar Photovoltaics via Energy.gov (Vea esta página web en Español.)

NOTE to receive Residential Energy Tax Credits you'll submit IRS Form 5695 when filling your 2023-2032 taxes, if you meet the requirements detailed on IRS.gov.

Visit CERTs guide to Solar Energy

Updated 5/1/2023

$2,500 available for ENERGY STAR certified manufactured homes meeting the most recent ENERGY STAR Manufactured New Homes program requirements (currently Version 2, with Version 2.1 currently proposed to be implemented in May 2023).

Visit CERTs Energy Guide for Manufactured Homes

Updated 1/9/2023

What businesses need to know about...

Find details at IRS Commercial Clean Vehicle Credit.

Visit CERTs Guide to EVs

Updated 1/9/2023

REAP is undergoing big changes due to new funds from the IRA. 

REAP will host six quarterly competitions throughout the remainder of FY 2023 and FY 2024 to distribute the allocated funding ($1.05 billion):

  • June 30, 2023
  • September 30, 2023
  • December 31, 2023
  • March 31, 2024
  • June 30, 2024
  • September 30, 2024

Now 50% grants for rural businesses, farms and agricultural producers, with the maximum grant size increased to $500,000 for energy efficiency projects and to $1 million for renewable energy systems!

Businesses must be located in rural areas with populations of 50,000 residents or less. Agricultural producers may be in rural or non-rural areas, must have at least 50% of their gross income coming from agricultural operations.

Eligible projects include renewable energy (e.g., solar, wind, biomass) and energy efficiency upgrades (e.g., high efficiency HVAC, insulation, refrigeration, switching from diesel to electric irrigation motors).

Get the latest criteria and program updates.

Updated 5/9/2023

Currently: The current 26% Commercial Solar Investment Tax Credit is increased to 30% and extended through 2024; the 30% applies to solar projects placed in service during or after 2022.

Coming in 2023: The base credit applies to projects <1 MW or that meet prevailing wage and apprenticeship requirements. If a project is >1 MW and does not meet those requirements, the base credit is 6%. 

There will also new credit adders that can be stacked for additional benefit: 

  • Up to 10% for projects that are located in "energy communities" (defined as brownfield sites, communities with high fossil fuel employment and high unemployment, and/or communities with closed coal mines or coal-fired power plants).
  • Up to 10% for solar projects <5MW located in low-income communities; applications will be required.
  • Up to 20% for solar projects < 5MW and built as part of an affordable housing project or to benefit low-income households; applications will be required.
  • Up to 10% for using US-manufactured solar products and construction material. 
  • Energy storage facilities are also eligible. 

In 2025: this provision becomes the "Clean Electricity Investment Credit"; extended through 2032 or until emission targets are reached. 

Visit Solar Energy Industries Association (SEIA) for a review of the Investment Tax Credit Extension (Section 1302), Production Tax Credit Addition (Section 1301), and Transition to New Technology Neutral Credit (Sections 13701 and 13702).

View Federal Solar Tax Credits for Businesses via Energy.gov

View IRS Credits and Deductions Under the Inflation Reduction Act

Note: This provision also allows a direct pay option for tax-exempt entities. More to come on this!

In addition to federal incentives, many businesses in Minnesota also have access to Property Assessed Clean Energy (PACE) financing for solar projects. 

Learn more about PACE

Updated 5/9/2023

What local governing bodies need to know about...

Updated 4/28/2023

Understanding the Inflation Reduction Act

Piggy bank with a dollar sign

What you need to know about the IRA: Tax credit vs Rebate

map of minnesota regions

What you need to know about the IRA: Area Median Income

Piggy bank with a dollar sign

What you need to know about the IRA: Direct Pay

More Resources

Find the most recent news and updates to tax law: IRS's Inflation Reduction Act.

More resources explaining Inflation Reduction Act incentives: 

Note: We're sharing resources to assist Minnesotans who are seeking information about federal funding opportunities. These resources are based on preliminary information released by the federal government. Program information may change as more guidance is provided by federal and state governments. For specific information on federal funding, please visit the relevant U.S. Government websites and consult with tax professionals regarding tax incentives that apply to you. 

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