The Inflation Reduction Act: what you need to know

Resources to save you energy and money

At CERTs we want to help you save energy and money with energy efficiency methods and renewable energy options. Let us help you navigate the federal and state incentives so you can create your own energy-saving plan.

As clean energy incentives change, we will update this info including time/date stamps within each updated section.

NOTE: We're tracking the changes to clean energy incentives from the July 4, 2025 signing of H.R. 1. They are not reflected in this guide. We're also developing a tool that will better help you navigate ways to pay for your clean energy projects and plan to launch it later this summer.

Questions? Feedback? Let us know!

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Understanding the Terms

Find out how tax credits and rebates differ.

Tax Credit vs Rebate

Learn about area median income and how to calculate your AMI.

Area Median Income

A new mechanism called elective or direct pay now exists for tax-exempt entities.

Elective Pay

What residents need to know

Residents + Electric Vehicles

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

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.

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

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

The Minnesota Electric Vehicle Rebate program opened in 2024 and is now closed.

Updated 4/17/2025

Residents + Energy Audits

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

Check with your gas or electric utility to see what home energy audits and related programs they have available.

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.

CERTs Energy Audit 101

Updated 4/17/2025

Residents + Energy Efficiency Tax Credits

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 eligible 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 4/17/2025

Residents + Energy Efficiency Rebates

Minnesota is currently designing its rebates programs and approaches with plans to open the programs to households in 2025. Stay up to date on rebates.

HOMES Rebates (Home Owner Managing Energy Savings) program is for energy saving improvements that impact the whole home or building. Households will be able to access up to $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. A few of the anticipated rebates 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

MN Home Energy Rebates Programs
ENERGY STAR's Home Improvement Savings Finder - finds clean energy incentives based on your zip code, including utility rebates.

Updated 4/17/2025

Residents + Heat Pumps

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.

The HEAR Rebate includes a 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

In addition to the Home Energy Rebates, the Minnesota Residential Heat Pump Rebate Program will provide financial assistance to eligible applicants that purchase and install a heat pump for space heating and cooling in the applicants’ Minnesota residence.

Visit MN Air Source Heat Pump Collaborative to learn more about product eligibility for tax credits, plus a list of Minnesota utilities and any rebates they offer for heat pumps.

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.

CERTs Heat PumpS 101

Updated 4/17/2025

Residents + Solar

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 >3 kW 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 Energy Storage Incentives program.

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.

CERTs solar EnergY 101

Updated 4/17/2025

Manufactured Homes + Energy Star

$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 3 to be implemented in 2026).

CERTs HOme Energy GuiDE

Updated 4/17/2025

What businesses need to know

Commercial + Electric Vehicles

Find details at IRS Commercial Clean Vehicle Credit.

Updated 1/9/2023

Commercial + Rural Energy for America Program (REAP)

The USDA announced the cancelation of the July 1-September 30, 2025 application window.

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.

Updated 7/18/2025

Commercial + Solar

The 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 <5 MW located in low-income communities; applications required for allocation.
- Applications received after June 27, 2024 will be date-stamped and prioritized based on submission date and time. The number of tax credit authorizations is limited for some of the application categories.
Up to 20% for solar projects <5 MW and built as part of an affordable housing project or to benefit low-income households; applications required for allocation.
Up to 10% for using US-manufactured solar products and construction material. On 5/16/2024 the IRS released additional guidance on this bonus.
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.

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 4/17/2025

Commercial + Energy Efficient Building Deduction 179D

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 6/17/2024

What tax-exempt entities need to know

Guides for Cities & Counties

Climate Action and the Inflation Reduction Act: A Guide for Local Government Leaders: Climate Mayors and C40 released a guidebook to help cities navigate the Inflation Reduction Act. (2022)
Climate City Corner | The Inflation Reduction Act and Cities (podcast): Episode 43 of City Climate Corner shares incentives for cities with the new law through interviews with Dr. Pete Wyckoff, Sr. Policy Advisor for Climate Energy and the Environment, and Minnesota Senator Tina Smith. (2022)
Database of State Incentives for Renewables & Efficiency
Elective Pay and Transferability Guidance from the IRS
Local Energy Rules | How Cities Can Make the Most of IRA Dollars (podcast): Episode 168 of Local Energy Rules shares ways cities can use Inflation Reduction Act funds for energy improvements, and includes a list of additional resources in the notes. (2022)
National Association of Counties | Legislative Analysis for Counties. (2023)
National League of Cities | Inflation Reduction Act: Clean Energy Project Eligibility for Local Governments. (2022)

Updated 4/17/2025

Guides for Tribal Governments

Elective Pay and Transferability Guidance from the IRS.
Tribal Relevant Programs in the Inflation Reduction Act [PDF] from the U.S. Department of Energy Office of Policy. (2022)
Investments for Tribal and Indigenous Communities from NDN Collective & Rewiring America.

Updated 4/17/2025

Tax-Exempts Entities + Elective Pay

Visit our Elective Pay info for details on how to register and what's eligible.
Elective Pay and Transferability Guidance from the IRS
- Note: Grant recipients are eligible for the full elective payment up to the cost of the technology. For example, if a school district receives an $80,000 Solar for Schools grant (for a $100,000 solar array), they would receive a $20,000 elective payment. Without a grant, the district would receive $30,000 in elective pay for the solar array.
Lawyers for Good Government Elective Pay resources.
Low-Income Communities Bonus Credit Program applications received after June 27, 2024 will be date-stamped and prioritized based on submission date and time. The number of tax credit authorizations is limited for some of the application categories.
- Helpful article about how to apply adders to your solar project (2023)
Direct (Elective) Pay Fact Sheet for Nonprofits | Clean Energy Group (2024)

Updated 4/17/2025

Tax-Exempts Entities + 179D

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 6/17/2024

More Resources

IRS's Inflation Reduction Act

Find the most recent news and updates to tax law.

MN Department of Commerce New Energy Programs

Minnesota Department of Commerce programs offering grants, rebates, and other funding opportunities.

Better Buildings Funding and Incentives Resource Hub

BlueGreen Alliance IRA User Guide

Database of State Incentives for Renewables & Efficiency (DSIRE)

Department of Energy Savings Hub

Tax credit and rebates listed for each appliance, EV, and home improvement option.

ENERGY STAR's Home Improvement Savings

Lists clean energy incentives based on your zip code, including utility rebates.

Guidance on Inflation Reduction Act’s Strong Labor Protections

Rewiring America's Savings Calculator

Free tool to estimate how much money you could save with the IRA.

U.S. Census Bureau Area Median Income Map

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.