Gaps and Barriers to Stacking Federal, State, and Local Incentives

The report identifies significant barriers to 'stacking' (combining) multiple financial incentives for US residential energy retrofits, including complex application processes, inconsistent performance standards, and funding gaps for health and safety repairs. It analyzes the interaction between Inflation Reduction Act (IRA) tax credits and rebates, noting that while clean energy retrofits can be more affordable than fossil fuel alternatives after incentives, low-income households often lack the 'tax appetite' to benefit from tax credits. RMI recommends that state program administrators prioritize funding for pre-electrification upgrades, consolidate application processes, and increase allocations for underserved communities and multi-family housing.

• Residents face three primary barriers to adopting residential retrofits: a lack of awareness regarding available incentives, a complex application process requiring multiple submissions with varying requirements, and funding gaps that prevent full home upgrades.
• There are critical funding gaps for health and safety measures, cold climate heat pumps, and pre-electrification upgrades. Health and safety repairs are particularly problematic because they are rarely administered alongside energy retrofit programs, often deferring residents from weatherization and efficiency services.
• Federal IRA tax credits (25C and 25D) can generally be stacked with other incentives, but utility subsidies and rebates must be applied first, reducing the qualifying cost used to calculate the tax credit.
• The Home Efficiency Rebate (HER) and Home Electrification and Appliance Rebate (HEAR) can be used for the same project but cannot be stacked for the same individual measure. Additionally, federal grants (such as the Weatherization Assistance Program) cannot share the cost of a single upgrade with HEAR.
• Clean energy retrofits are more affordable than fossil fuel retrofits for low- and middle-income residents once incentives are applied, though low-income residents are disadvantaged by a lack of tax liability to utilize federal tax credits.
• Current federal funding is insufficient to reach all needy residents; while approximately 60% of US households can access tax credits, only about 4 million or more low-income comprehensive retrofits are possible over the next 10 years through WAP and IRA rebates.
• Application variability creates market confusion, specifically regarding differing equipment performance standards (e.g., ENERGY STAR vs. CEE) and varying lists of qualified contractors across different programs.

APA

RMI (2023). Gaps and Barriers to Stacking Federal, State, and Local Incentives. https://rmi.org/app/uploads/dlm_uploads/2023/12/stacking_federal_state_and_local_incentives.pdf

Chicago

RMI. Gaps and Barriers to Stacking Federal, State, and Local Incentives. 2023. https://rmi.org/app/uploads/dlm_uploads/2023/12/stacking_federal_state_and_local_incentives.pdf.

Wikipedia

{{cite report |author=RMI |title=Gaps and Barriers to Stacking Federal, State, and Local Incentives |date=December 2023 |url=https://rmi.org/app/uploads/dlm_uploads/2023/12/stacking_federal_state_and_local_incentives.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{rmi2023gaps, author = {{RMI}}, title = {{Gaps and Barriers to Stacking Federal, State, and Local Incentives}}, institution = {RMI}, year = {2023}, month = dec, url = {https://rmi.org/app/uploads/dlm_uploads/2023/12/stacking_federal_state_and_local_incentives.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }