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

Author

Listed:
  • David Coyne

    (United States Department of the Treasury, Office of Tax Analysis)

  • Isla Globus-Harris

    (Colgate University)

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.

Suggested Citation

  • David Coyne & Isla Globus-Harris, 2025. "A review of US residential energy tax credits: distributional impacts, expenditures, and changes since 2006," Journal of Environmental Studies and Sciences, Springer;Association of Environmental Studies and Sciences, vol. 15(2), pages 425-436, June.
    • Handle: RePEc:spr:jenvss:v:15:y:2025:i:2:d:10.1007_s13412-024-00918-0
    DOI: 10.1007/s13412-024-00918-0
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