A review of US residential energy tax credits: distributional impacts, expenditures, and changes since 2006

David Coyne () and Isla Globus-Harris ()
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David Coyne: United States Department of the Treasury, Office of Tax Analysis
Isla Globus-Harris: Colgate University

Journal of Environmental Studies and Sciences, 2025, vol. 15, issue 2, No 14, 425-436

Abstract: Abstract The Inflation Reduction Act of 2022 recently extended two residential energy tax credits, the Residential Energy Efficient Property (REEP) credit and the Nonbusiness Energy Property (NEP) credit, through 2034 and 2032, respectively. In this paper, we provide an updated description of credit take-up and tax expenditures over the past 15 years, showing how the tax expenditure on the REEP credit has rapidly grown while the tax expenditure on the NEP credit has declined. Within the REEP credit, we document a large increase in solar electric claims over time. Additionally, we examine the income distribution of credit takers and geographic heterogeneity of credit take-up using IRS individual tax data. Both tax credits primarily benefit higher income taxpayers.

Keywords: Energy tax credits; Personal income tax credits; Residential energy efficiency; Distributed renewable energy generation (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s13412-024-00918-0

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