Minnesota Legislators Ponder Household Energy Efficiency Tax Credits


Minnesota legislators are considering a refundable tax credit of up to $2,000 for residents who invest in energy efficiency.

Rep. Jeff Brand, DFL-St. Peter, sponsored the bill, HF810.

“This will give folks an incentive if they were kind of teetering,” Brand said Feb. 2. “But maybe it will offer more incentive to folks who weren’t quite able to reach that affordability range.”

The House Tax Committee on Feb. 2 laid it over for possible inclusion in an omnibus bill. Expenditures in three categories---appliances, large improvements and energy efficiency measures---could qualify. Taxpayers could claim up to $1,000 in expenditures from each category and collect up to $2,000 in tax credits.

Qualifying expenditures include ductless mini-split heat pumps, electric vehicles and residential chargers, smart thermostats and solar water heaters.

With an amendment the committee adopted, the bill’s language aligns with similar 2022 bills. Under the amendment, for married couples filing jointly, the energy efficiency tax credit is reduced $1 per every $30 of adjusted gross income over $150,000. For other types of filers, the credit is $1 less per every $15 of adjusted gross income above $75,000.

The committee also passed an amendment from Rep. Chris Swedzinski, R-Ghent. He proposed allowing residents’ upgrades to wood-burning stoves and boilers that meet EPA standards to qualify for the tax credit, as a method of protecting Minnesota manufacturers.

Rep. Greg Davids, R-Preston, said the bill won’t help the climate, Tesla owners don’t need tax credits and people who make lower levels of income don’t buy electric cars. However, he also said the bill says rich people can pollute and destroy the planet through climate change while poor people can’t.

The Department of Revenue estimates the bill’s provisions would reduce the state’s General Fund by $48.8 million in fiscal year 2024 and $50.2 million in fiscal year 2025, a Minnesota House of Representatives article said. According to the bill, the tax credit ends in 2027 but its ending doesn’t impact the Commissioner of Revenue’s ability to audit or examine and assess claimed credits.

Rep. Bjorn Olson, R-Fairmont, said, considering variations in estimated budget impacts of the Inflation Reduction Act, the Revenue Department may be underestimating how much less money the state’s General Fund would receive because of the bill.

Rep. Andy Smith, DFL-Rochester, said the state must spend the money in tax credits to promote energy efficiency before doing so becomes more expensive.

Rep. Kristin Robbins, R-Maple Grove, said while she supports transitioning to renewable energy, she thinks an education tax credit bill, HF915, that the committee laid over earlier that day should get priority, considering funding limitations, as it would have a larger return on investment. The education bill, which Rep. Matt Norris, DFL-Blaine, sponsored, would raise Minnesota’s income-based phaseout from $33,500 to $70,000 and increase the maximum credit to $1,000 to $1,500, at a cost of $11.1 million from the General Fund.

The Minnesota law adds to the Inflation Reduction Act’s tax incentives for use of electricity, which include buying electric vehicles. The U.S. Treasury Department on Feb. 3 announced changes in vehicle classification standards for the Inflation Reduction Act that will allow more vehicles to qualify as SUVs, which have a higher price limit for the $7,500 electric vehicle tax credits.

We thank The Center Square for reprint permission.

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