New federal financial data and analysis show that under the Inflation Reduction Act (IRA), more than 3.4 million American families benefited from $8.4 billion in tax credits to lower the costs of clean energy and energy efficiency upgrades made to their homes during 2023.
“The Biden-Harris administration’s top economic priority is lowering costs for American families,” U.S. Treasury Secretary Janet Yellen said, “and the Inflation Reduction Act is advancing that goal by making home energy upgrades more affordable and cutting monthly utility bills.”
The announcement on Aug. 7 marks the first public release of new data from the Internal Revenue Service (IRS) from 2023 tax filings showing the benefit of the IRA’s clean energy tax incentives for consumers and new analysis from the U.S. Department of the Treasury Office of Economic Policy.
The number of families benefiting from the IRA’s expanded credits for investments that lower their utility bills increased almost one-third compared to tax year 2021, prior to passage of the act, and the aggregate value of the credits increased by almost two-thirds, according to the IRS data.
To date, American families have claimed more than $6 billion in credits for residential clean energy investments in solar electricity generation, solar water heating, and battery storage, among others, on 2023 tax returns filed and processed through May 23, the IRS said.
During the same time period, families also have claimed more than $2 billion for energy efficient home improvements, including heat pumps, efficient air conditioners, insulation, windows, and doors. The IRS said it expects these estimates to increase as additional returns are filed and processed.
In addition to upfront cost savings on home improvements, consumers will save on their energy bills far into the future, according to Treasury.
Recent research from U.S. national labs and analysis from the department’s Office of Economic Policy shows that after consumers adopt the upgrades, they can save hundreds or thousands of dollars per year on their utility bills, depending on the upgrades made to their homes.
For example, households installing residential solar have saved a median of $2,230 annually, and households that install efficient heat pumps and improve building efficiency are expected to save up to $600, $1,200, or $3,100 per year, based on the type of heating and cooling system that is being replaced, according to the office’s analysis.
Overall, over 750,000 families claimed investments in residential solar electricity; 250,000+ families claimed investments in electric or natural gas heat pumps; more than 100,000 families claimed investments in heat pump water heaters; and nearly 700,000 families claimed investments in insulation and air sealing, according to the newly released data.