The landmark Inflation Reduction Act that President Joe Biden signed into law this week includes $369 billion for climate and energy programs — tens of billions of which are intended to directly benefit American consumers.
Those subsidies for homeowners, low-income Americans and even farmers are sprinkled throughout the sprawling package, which modeling suggests could cut U.S. emissions of planet-warming gases 40 percent from 2005 levels by the end of the decade.
But getting consumers to take advantage of the new benefits — and the emissions reductions they’ll entail — will be a challenge for the Biden administration and its allies.
“Implementation of all of this, it’s gonna take a bunch of work. Things are not done,” said Sam Calisch, the head of special projects at the environmental group Rewiring America. “Because in the end, the amount of money that goes out the door is totally dependent on uptake.”
Among the barriers consumers could face in accessing the benefits are the sometimes sizable personal investments needed to qualify for the federal tax credits and the need for states to administer some direct subsidy programs. Then there is the complexity of qualifying for the benefits, some of which needs to be sorted out by the Internal Revenue Service, EPA, the Department of Energy or other agencies.
Here’s what we know about how you — yes, you — can access the climate and energy benefits in the Inflation Reduction Act.
Electric vehicle subsidies
An electric car charges at a mall parking lot on June 27 in Corte Madera, Calif. | Justin Sullivan/Getty Images
If you were in the market for an EV, it’s your lucky day. Sorta.
The Inflation Reduction Act expands the tax credits available to EV buyers. At full value, the credit is worth $7,500. That’s particularly good news if you were looking to buy an EV from Tesla Inc. or General Motors Co., which makes the popular Chevrolet Bolt. Neither automaker was eligible for the federal tax credits after hitting a quota under the preexisting subsidy program. Other companies, such as Ford Motor Co. and Nissan Motor Co. Ltd., were on track to hit the cap in the next couple of years.
The good news doesn’t stop there. Instead of claiming the credit on your taxes as you would have needed to do in the past, you will be able to directly apply it to the purchase price of the vehicle starting in 2024.
“The big picture is you are going to have an EV tax credit that is around longer than the status quo,” said Corey Cantor, an EV analyst at Bloomberg New Energy Finance.
So time to head to the local dealership and buy a new EV, right? Well, it’s not so simple.
The new tax credit comes with strings attached. The vehicle needs to be assembled in North America. You, the buyer, will need to satisfy income eligibility requirements. Individuals making more than $150,000 a year or couples making more than $300,000 annually don’t qualify. And if you’re eyeing a sleek Lucid Air, with a base price of $87,400, you’re out of luck. The law caps the value of new sedans eligible for the credit at $55,000 and trucks and SUVs at $80,000.
Most importantly, the car you buy will need to satisfy two manufacturing requirements to be eligible for the credit. The first requires a portion of the battery parts to be made in North …….