Breaking Down the Inflation Reduction Act of 2022

On August 16th, President Biden signed a sweeping tax, health and climate bill into law, delivering a historic investment in clean energy. The Senate approved the package by a margin of 50-50 with Vice President Harris casting the tie-breaking vote. The House of Representatives approved the package by a margin of 220-207. The measure includes $369 billion  toward climate and energy.

Take action here to thank (or say no thanks) to your representatives for their vote on the Inflation Reduction Act.

Here’s what the bill contains:

  1. Decarbonize the Economy 

The law will reduce emissions in every sector of the economy, including electricity production, transportation, industrial manufacturing, buildings, and agriculture. This includes:

  • Tax credits for clean sources of electricity and energy storage
  • Roughly $30 billion in targeted grant and loan programs for states and electric utilities to accelerate decarbonization.  
  • Over $9 billion for federal procurement of American-made clean technologies to create a stable market for clean products
  • $27 billion clean energy technology accelerator to support deployment of technologies to reduce emissions, especially in frontline communities.  
  • Tax credits and grants for clean fuels and clean commercial vehicles.
  • Grants and tax credits to reduce emissions from industrial manufacturing processes, including almost $6 billion for a new Advanced Industrial Facilities Deployment Program to reduce emissions from the largest industrial emitters like chemical, steel and cement plants.  
  • $3 billion for the U.S. Postal Service to purchase zero-emission vehicles.  
  • A Methane Emissions Reduction Program to penalize leaks from the production and distribution of natural gas. 


  1. Invest in Frontline Communities and Enact Environmental Justice 

This law includes over $60 billion in environmental justice priorities to drive investments into frontline communities. This includes:  

  • $3 billion for The Environmental and Climate Justice Block Grants for community-led projects in frontline communities and community capacity building centers to address disproportionate environmental and public health harms related to pollution and the climate crisis.  
  • $3 billion for grants to Reduce Air Pollution at Ports and to support the purchase and installation of zero-emission equipment and technology at those ports.
  • $3 billion for The Neighborhood Access and Equity Grants to support neighborhood equity, safety, and affordable transportation access with four competitive grants to reconnect communities divided by existing infrastructure barriers such as highways, mitigate negative impacts of transportation facilities or construction projects on frontline communities, and support equitable transportation planning and community engagement activities.   
  • $1 billion for clean heavy-duty vehicles, like school and transit buses and garbage trucks. 
  • The clean energy tax credits include either a bonus or set-aside structure to drive investments and economic development in frontline communities. 


  1. Lower Energy Costs for Consumers 

This law will provide incentives for consumers to lower the costs of energy with a significant portion of the funding going to lower income households and frontline communities.  

This includes:

  • $9 billion in consumer home energy rebates, with an emphasis on lower income consumers, to electrify home appliances and for energy efficient retrofits.  
  • 10 years of consumer tax credits to decarbonize homes and to make them more energy efficient, producing heat pumps, rooftop photovoltaic solar panels, electric HVAC and water heaters.
  • $4,000 consumer tax credit for lower/middle income individuals to buy used clean vehicles, and up to $7,500 tax credit to buy new clean vehicles.  
  • $1 billion grant program to make affordable housing more energy efficient. 


  1. Invest In Rural Communities 

This law will make major investments to ensure that rural communities are at the forefront of climate solutions. This includes:

  • More than $20 billion to support climate-smart agriculture practices.  
  • $5 billion in grants to support healthy, fire resilient forests, forest conservation and urban tree planting.  
  • Tax credits and grants to support the domestic production of biofuels, and to build the infrastructure needed for sustainable aviation fuel and other biofuels.  
  • $2.6 billion in grants to conserve and restore coastal habitats and the communities who call those coasts home.


  1. Increase Domestic Manufacturing and Secure American Energy Security 

This law will boost cleaner energy production through major investments in American clean energy manufacturing. This includes:

  • Estimated $30 billion in production tax credits to accelerate domestic manufacturing of solar panels, wind turbines, batteries, and critical minerals processing.  
  • $10 billion investment tax credit to build facilities that produce electric vehicles, wind turbines, and solar panels.  
  • $2 billion for National Labs to accelerate energy research and development. 
  • Up to $20 billion in loans to build new clean vehicle manufacturing facilities.
  • $500 million in the Defense Production Act for heat pumps and critical minerals processing.  
  • $2 billion in grants to retool existing auto manufacturing facilities to manufacture clean vehicles.

Find out what the Inflation Reduction Act means specifically for New York here.

By Matthew Salton