October 04, 2021
(Washington, DC) – U.S. Senators Jeanne Shaheen (D-NH) and Maggie Hassan (D-NH) joined U.S. Senator Cory Booker (D-NJ) and a group of Senators to urge the inclusion of a direct pay option for residential renewable energy property tax credits in Section 25D of the Internal Revenue Code of 1986 (25D). In a letter, the Senators detailed how a direct pay option would help low- and moderate-income (LMI) households install solar energy systems and help meet President Biden’s goal of curbing greenhouse gas emissions by 50% from 2005 levels by 2030.
“[The] essential tax credit is designed to help residential customers install renewable energy systems such as solar, wind and geothermal, but without a direct pay option, the low- and moderate-income (LMI) households who would benefit most from distributed generation are effectively blocked from accessing this tax credit,” wrote the Senators. “We believe that a direct pay option will not only help us meet President Biden’s goal of a 50% reduction of greenhouse gas emissions over 2005 levels by 2030, but it will also help address long-standing impacts of climate injustice.”
“Renewable energy and environmental justice advocates estimate that roughly half of American households – approximately 60 million households – do not owe enough taxes to fully capitalize on the 25D tax credit in a single year under current law,” continued the Senators. “However, because these LMI households spend more of their income on energy bills, they will benefit disproportionately from installing distributed generation like solar on their properties. We have an obligation to ensure that all Americans have equal access to benefit from the renewable energy transition, and securing 25D direct pay is critical to this goal.”
Taking into account the number of LMI households who own their homes, the current tax code prevents an estimated 26 million households from fully benefiting from the residential solar tax credit in the same year that the system was purchased and placed in service, including 3.2 million Black households and 3 million Hispanic households. Implementing a direct pay option would allow homeowners to fully and immediately realize their tax credits through a refund provided by the IRS, providing much needed capital to LMI households while directly addressing the worsening climate crisis.
The Senators concluded the letter by calling for the direct pay option to be included in the upcoming reconciliation package to ensure that our nation is able to “advance our environmental and climate justice goals, reduce greenhouse gas emissions, and create more good-paying jobs in communities across the country – building upon an estimated 85,000 residential solar installation jobs in 2020.”
The letter was cosigned by Senators Tammy Duckworth (D-IL), Jon Ossoff (D-GA), Brian Schatz (D-HI), Alex Padilla (D-CA), Dianne Feinstein (D-CA), Michael Bennet (D-CO), Ed Markey (D-MA), Sheldon Whitehouse (D-RI), Chris Murphy (D-CT), Rev. Raphael Warnock (D-GA), Elizabeth Warren (D-MA), Chris Van Hollen (D-MD), Tina Smith (D-MN), Patrick Leahy (D-VT), Kirsten Gillibrand (D-NY), Sherrod Brown (D-OH), Jeff Merkley (D-OR), Dick Durbin (D-IL), Richard Blumenthal (D-CT), Mazie Hirono (D-HI), Tim Kaine (D-VA), and Martin Heinrich (D-NM).
The full text of the letter can be found here.
As a senior member of the Senate Appropriations Committee, ensuring Granite State families and seniors have access to heating and energy assistance has been a top priority for Senator Shaheen. Shaheen has historically saved and boosted funding for Low Income Home Energy Assistance Program (LIHEAP), which former President Trump’s budget proposals repeatedly sought to eliminate. In addition to the $900 million in LIHEAP funds allocated through the CARES Act, Shaheen and Hassan worked to secure $3.75 billion for LIHEAP in fiscal year 2021 government funding legislation that was signed into law.
Senator Hassan is working to address climate change and address its impacts in New Hampshire and across the country. As a member of the Senate Finance Committee, Senator Hassan has helped advance the Clean Energy for America Act which would provide incentives for clean electricity, invest in improving the electric grid, encourage transportation electrification, invest in workers who are helping grow the clean energy economy, and crack down on tax incentives for fossil fuels. The Senator also led a number of her colleagues in reintroducing bipartisan legislation to support and expand programs such as the Regional Greenhouse Gas Initiative (RGGI), a collaborative effort across 11 states including New Hampshire that uses market-based tools to reduce greenhouse gas emissions from the power sector.