The Inflation Reduction Act (IRA), signed into law by President Joe Biden in August 2022, set the country on a path toward a 40% reduction in greenhouse gas emissions by 2030 compared to the 2005 levels.
That’s substantial potential progress toward decarbonizing the U.S. economy and responding to the climate crisis. Faith communities can lend their support and take advantage of cost savings secured through this new law.
Who can take advantage of the IRA’s benefits?
Some IRA initiatives will aid families and organizations who want to take advantage of tax deductions for green appliances. Tax-exempt entities, including nonprofits and religious organizations, can also use tax benefits and grants to help reduce their commercial carbon footprint and lower energy bills.
Through the IRA’s benefits, houses of worship seeking to become more environmentally friendly can renovate their facilities and make them more efficient. This is great news for religious institutions like Quaker Meetings, which seek to empower their communities to live sustainably.
Benefits Accessible to Houses of Worship
The Biden administration is still rolling out information about these incentives, but key benefits available this fiscal year are:
- Clean Energy Investment Tax Credit (ITC)
- What it is: Investment tax credits for installing onshore and offshore wind, solar, geothermal, battery storage, and pumped-storage hydro energy.
- What exactly does it do? It offers 6% in investment tax credits as a direct payment toward the base costs of a construction project. The organization can receive an additional 30% if it meets the contractual labor wage and apprenticeship requirements.
- Example: A Quaker monthly meeting decides to install solar panels on the roof of its building. The installment costs $20,000. This means that the meeting can, as a tax-exempt organization, receive $1,200 towards its tax returns and a possible additional amount of $6,000.
- Clean Energy Production Tax Credit (PTC)
- What it is: Tax credits as direct payment for utilizing solar, offshore and onshore wind, and geothermal energy. Organizations receive a tax credit to produce electricity based on the kilowatt-hour (kWh) of power produced.
- What exactly does it offer? A base tax credit of $0.05 per kWh and a bonus tax credit of $0.25 per kWh if contractual labor wage and apprenticeship requirements are met. The amount of return is increased over time according to inflation.
- Example: A Catholic church uses 30,000 kWh in a year. This means the church could receive $1,500 in tax returns upon installing solar panels and potentially another $7,500 in bonus returns.
- Energy Efficiency Materials Pilot Program for Nonprofits (Developed by August 2023)
- What it is: Grant funding for nonprofit organizations to renovate building materials to improve energy efficiency, lower utility costs, and reduce carbon emissions.
- What exactly does it offer? Funding for energy efficiency materials, including roofing, lighting systems, windows, and doors. It also funds the renovation of heating, ventilation, and air conditioning systems and components. It can be applied toward insulation, wiring, and plumbing improvements.
- Example: A synagogue is experiencing abnormal energy costs during winter. By using grant funding to replace its windows, the synagogue will be able to decrease its use of the heating system during the coldest time of the year and gradually decrease its energy bill.
Faith in Action
As people of faith and conscience, we seek an earth restored. Responsible use and right sharing of the world’s natural resources are crucial to human survival and welfare. The provisions of the IRA will aid houses of worship as they exemplify our care for people and the environment.
As more IRA benefits are rolled out at the state and federal level, we will continue to share resources that individuals and organizations can access to make their space more environmentally friendly.