By: Emma Abrams
This August marks a year since the Inflation Reduction Act (IRA) was signed into effect. The IRA is the US’s largest piece of climate legislation with an estimated investment of $369 billion in climate and clean energy investments, with the goal of cutting greenhouse gas emissions by around 42% by 2030. The bill includes $92 billion in clean energy production and $13 billion in EV purchase incentives. In the year since its passage, the IRA has helped lower the costs of renewable energy and increase the adoption of electric vehicles.
The IRA is lowering costs of clean energy, reducing greenhouse gas emissions and can help your business become more climate-friendly. Through tax deductions, businesses can see huge savings when they make changes to their operations to be more environmentally conscious.
For example, if your business buys a plug-in electric vehicle, you may qualify for a clean vehicle tax credit of up to $40,000 under the Commercial Clean Vehicle Credit. It will actually be easier for businesses than individuals to take advantage of the clean vehicle credit! Individuals purchasing electric vehicles for the credit will be subject to more requirements about source materials, limiting options. Although you must still purchase from a qualified manufacturer, the previous cap on automakers has been eliminated, opening up more options. With this tax credit (and states like New York and California starting to require zero-emission cars), now is the perfect time to invest in a cleaner business. What other tax credits could your business qualify for? See below:
| Tax Credit | What qualifies | Worth |
| Commercial Clean Vehicle Credit | Purchasing either a plug-in electric vehicle under 14,000 pounds with a battery capacity of at least 7 kWh, an EV over 14,000 pounds with a battery capacity of at least 15 kWh or a qualified fuel cell vehicle. | Maximum credit is $7,500 for vehicles under 14,000 pounds and $40,000 for all other vehicles |
| Energy Efficient Commercial Building Deduction | Building owners or designers who construct energy efficient buildings or increase the energy efficiency of existing buildings by at least 25% | Up to $5.00 per square foot |
| Sustainable Aviation Fuel Credit | Purchasing sustainable aviation fuel with at least 50% reduction in lifecycle greenhouse gas emissions | $1.25 for every gallon, with an extra cent for every percent over 50% |
| Renewable Electricity Production Tax Credit | Renewable electricity projects that meet fair labor requirements | 1.3 cents/kWh for electricity generated from landfill gas (LFG), open-loop biomass, municipal solid waste resources, and small irrigation power facility, or 2.6 cents/kWh for electricity generated from wind, closed-loop biomass and geothermal resources. |
| Biodiesel Mixture Excise Tax Credit | Use of a biodiesel blend of pure biodiesel, agri-biodiesel, or renewable diesel and petroleum diesel containing at least 0.1% diesel fuel. | $1.00 per gallon |
Globally, there is more and more policy regulating businesses’ climate impact, as well as growing incentives for emissions reductions. Don’t worry if you’re confused: that’s where we come in! From measuring your carbon footprint to communicating your environmental impact with clients, we can take you through every step of your company’s sustainability journey. Learn more about our Sustainability Consulting services or contact us today!