Strategic Tax Credits to Decarbonize Buildings

The policy brief advocates for targeted, refundable tax credits to drive the transition to zero-carbon buildings and deep energy retrofits in the US. It proposes six specific tax credit mechanisms—including improvements to existing credits like 45L and 179D and the creation of new ones for lead safety and clean heating—to overcome cost barriers, support low-income housing, and scale domestic manufacturing of heat pumps.

• To achieve President Biden's goal of reducing greenhouse gas emissions by 50 percent by 2030, the US must build only zero-carbon buildings and perform deep energy retrofits on approximately 4 million buildings every year, representing 5 percent of the existing building stock.
• Current US tax provisions for building energy efficiency are insufficient because they are too complex, too low in value, and often inaccessible to low-income households or federally supported low-income housing.
• The author proposes a suite of six refundable tax credits to transform the building market: improving the Energy Efficient Home Credit (45L) to offer $12,500 for zero-carbon performance; increasing the Commercial Buildings Energy-Efficiency Tax Deduction (179D) to a $15–$20 per square foot credit for 50%+ energy reductions; and creating a 30 percent basis adjustment for deep energy retrofits via the Low-Income Housing Tax Credit (LIHTC-DEBA).
• To support the broader transition, the brief recommends three additional credits: a Home Lead Safety Tax Credit (36B) to address lead paint during decarbonization, a 30 percent Clean Heating and Cooling Tax Credit (45X) for replacing fossil fuel systems in commercial and multifamily buildings, and an updated Energy Efficient Appliance Credit (45M) to increase domestic manufacturing of heat pumps.

APA

RMI (2021). Strategic Tax Credits to Decarbonize Buildings. https://rmi.org/resources/strategic-tax-credits-to-decarbonize-buildings/

Chicago

RMI. Strategic Tax Credits to Decarbonize Buildings. 2021. https://rmi.org/resources/strategic-tax-credits-to-decarbonize-buildings/.

Wikipedia

{{cite report |author=RMI |title=Strategic Tax Credits to Decarbonize Buildings |date=7 July 2021 |url=https://rmi.org/resources/strategic-tax-credits-to-decarbonize-buildings/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{rmi2021strategic, author = {{RMI}}, title = {{Strategic Tax Credits to Decarbonize Buildings}}, institution = {RMI}, year = {2021}, month = jul, url = {https://rmi.org/resources/strategic-tax-credits-to-decarbonize-buildings/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }