The Distributional Effects of U.S. Tax Credits for Heat Pumps, Solar Panels, and Electric Vehicles

Severin Borenstein and Lucas Davis

No 32688, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Over the last two decades, U.S. households have received $47 billion in tax credits for buying heat pumps, solar panels, electric vehicles, and other “clean energy” technologies. Using information from tax returns, we show that these tax credits have gone predominantly to higher-income households. The bottom three income quintiles have received about 10% of all credits, while the top quintile has received about 60%. The most extreme is the tax credit for electric vehicles, for which the top quintile has received more than 80% of all credits. The concentration of tax credits among high-income filers is relatively constant over time, though we do find a slight broadening for the electric vehicle credit since 2018. The paper then turns to the related question of cost effectiveness, examining how clean energy technology adoption has changed over time and discussing some of the broader economic considerations for this type of tax credit.

JEL-codes: H23 Q42 Q58 (search for similar items in EconPapers)
Date: 2024-07
New Economics Papers: this item is included in nep-ene, nep-env, nep-inv, nep-pbe, nep-pub, nep-tid and nep-tre
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Citations: View citations in EconPapers (2)

Published as Severin Borenstein and Lucas W. Davis, "The Distributional Effects of US Tax Credits for Heat Pumps, Solar Panels, and Electric Vehicles." National Tax Journal, Volume 78, Number 1, March 2025

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