On August 12, the House passed the Senate-approved Inflation Reduction Act. The legislative package included climate and tax changes that will mark one of the most substantive climate bills in the U.S. history, with $369 billion provided for investments in climate resilience and energy security programs. On Tuesday, August 16, President Biden will sign the legislation into law.
While the legislation doesn’t focus on housing, the legislative package includes a number of housing-related provisions that, when taken together, can help make homes and communities more green, more affordable, and more climate resilient for the future. Specifically, the bill includes investing $9 billion in consumer home energy rebate programs with a focus on low-income consumers; allocating $1 billion for a HUD-led grant program to improve the energy and water efficiency of eligible affordable housing; investing $3 billion in Environmental and Climate Justice Block Grants to address disproportionate environmental and public health harms related to pollution and climate change; and providing $1 billion to incentivize states and localities to adopt and implement energy codes that meet or exceed the 2021 International Energy Conservation Code.
Additionally, the package includes policy changes designed to ensure that energy credits do not negatively impact the Low-Income Housing Tax Credit (Housing Credit) basis. As a part of the tax provisions proposed to raise revenue, the legislation would implement a 15% minimum tax rate on book income for businesses earning over $1 billion in revenue. The book income tax in the Inflation Reduction Act draws from provisions in the previous Build Back Better proposal and would still allow general business credits, such as the Housing Credit and New Markets Tax Credit, to be taken against that minimum rate.