Clean Energy Incentives

The Inflation Reduction Act: what you need to know

Resources to save you money and energy

At CERTs we want to help you 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, 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 updated section.

Questions? Feedback? Let us know! Or join an upcoming, online Q&A Session: January 16, March 6, May 8

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We created slides, handouts, and other resources to help you spread the word about the clean energy incentives within the Inflation Reduction Act. Sign up to be an ambassador and you'll receive updates about rebates, tax credits, and new tools you can share. 

Understanding the Inflation Reduction Act

yellow piggy bank

Find out how tax credits and rebates differ and what you can access.

MN Map

Find out what area median income is, and how can you estimate yours. 

Blue piggy bank

With a mix of federal funding and tax credits, the Inflation Reduction Act includes a new mechanism called elective or direct pay for tax-exempt entities.

What residents need to know

2024 UPDATE

Clean Vehicle Tax Credits must be initiated and approved at the time of sale. The tax credit may be provided in the form of cash, down payment, or partial payment for the EV. Find details at IRS Transferring Clean Vehicle Tax Credits Information for Consumers [PDF].

NEW VEHICLES

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 taxpayers

Find which new vehicles are eligible.

USED VEHICLE FEDERAL TAX CREDIT

You may qualify for a credit of up to $4,000 for qualified, previously-owned clean vehicles purchased in 2023 or after. Find which pre-owned vehicles are eligible.

MORE RESOURCES

The Department of Commerce created the Minnesota Electric Vehicle Rebate program which opens on February 7, 2024 with limited funds.

Drive Electric Minnesota developed a database of available and upcoming electric vehicle and charging station incentives.

The Department of Energy Savings Hub for Drivers offers information on clean vehicle incentives and eligibility.

Visit CERTs Guide to EVs

Updated 1/30/2024

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 2024.

Home Efficiency Rebates (also called HOMES) program is for whole-home energy saving improvements. Low- and moderate-income households will be able to access $2,000-8,000 depending on amount of energy savings achieved and the household's income. Existing single-family homes and multifamily buildings will be eligible. 

Home Electrification and Appliance Rebate Program (HEAR) will provide point-of-sales rebates to replace non-electric appliances with more efficient electric appliances, and to upgrade a home's electrical service to be ready for an increased electric demand. Up to $14,000 in rebates will be available to households with a total annual income less than 150% of the area median income. Rebates anticipated include:

 Electric Load Service Center upgrades/Breaker box

 - See the MN Residential Electrical Panel Grant Program for additional financial assistance. 

 $4,000
 Electric Stove, Cooktop, Range, and/or Oven  $840
 Electric Wiring  $2,500
 Heat Pump Clothes Dryers  $840

 Heat Pump Heating/Cooling

- See the MN Residential Heat Pump Rebate Program for additional financial assistance.

 $8,000
 Heat Pump Water Heaters  $1,750
 Weatherization (Insulation, Air Sealing, Ventilation)  $1,600

MORE RESOURCES

Updated 1/30/2024

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

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.

MORE RESOURCES

The MN Department of Commerce's Minnesota Residential Heat Pump Rebate program features updates about the upcoming federal and state rebates.

Visit MN Air Source Heat Pump Collaborative to learn more about product eligibility for tax credits.

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 8/7/2023

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). 

Additional grants will be available from MN's On-Site Energy Storage Systems Installation Incentives program.

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 12/15/2023

$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

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

Investment Tax Credit was bumped up to 30% in 2023, and applies to projects less than 1 MW, or projects more than 1 MW which meet the prevailing wage and apprenticeship requirements. If a >1 MW project does not meet those requirements, the base credit is 6%. 

There are 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 required for allocation and opened 10/19/2023.
  • Up to 20% for solar projects < 5MW and built as part of an affordable housing project or to benefit low-income households; applications required for allocation and opened 10/19/2023.
  • Up to 10% for using US-manufactured solar products and construction material. 
  • Energy storage facilities are also eligible

Note: in 2025 the Investment Tax Credit and Production Tax Credit become the "Clean Electricity Investment Credit" (a technology neutral incentive) and extends 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

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

Updated 10/27/2023

179D was created in 2006 as an incentive for commercial building owners to install energy-efficient systems. 

Prior to the IRA, a commercial building owner could get a tax deduction of $1.88/square foot if the renovation achieved 50% energy savings or the new construction was 50% more energy efficient over a standard energy benchmark.

The IRA lowered the required energy savings to 25% and set a sliding scale for the amount of the deduction available from $0.50/sq ft with 25% energy savings to $1/sq ft at 50% energy savings. If following prevailing wage and apprenticeship guidelines, the tax deduction can be up to $5/sq ft.

Updated 10/25/2023

What tax-exempt entities need to know

Updated 6/16/2023

Updated 6/16/2023

Updated 1/4/2024

 

179D was created in 2006 as an incentive for commercial building owners to install energy-efficient systems. 

Section 179D eligibility was expanded under the IRA to include buildings owned by tax-exempt organizations who can allocate the tax deduction to the building's architect, engineer, or contractor that does pay taxes, making it a negotiation point on the cost of the project and they benefit from ongoing reduced utility bills. 

The required energy savings is 25% and a sliding scale sets the amount of the deduction available from $0.50/sq ft with 25% energy savings to $1/sq ft at 50% energy savings. If following prevailing wage and apprenticeship guidelines, the tax deduction can be up to $5/sq ft.

Nonprofits should get guidance from qualified professionals:

  • Make sure the firms bidding on work are up to speed on Section 179D, and loop in legal and tax advisory teams into the project to help maximize possible deductions.
  • Raise the issue of 179D deductions up front so the bidding firms will reflect possible savings when pricing the project, and to ensure the energy efficiency eligibility requirements will be met.

Updated 10/25/2023

 

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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