'One Big Beautiful Bill' could end energy tax credits, jobs for thousands of Hoosiers
Indiana homeowners hoping to take advantage of tax credits on new clean energy upgrades and purchases could lose thousands of dollars in incentives if the U.S. House's federal budget proposal moves forward.
The federal spending plan, dubbed the One Big Beautiful Bill Act, currently ends homeowner savings on solar panel and battery installations, efficient appliances and other energy-saving home improvements such as new doors and windows, biomass stoves and energy audits.
Indiana's seven Republican representatives voted to approve the bill, with the funding cuts, while the state's two Democrats voted against it.
The cuts are part of the massive House bill that is now in the U.S. Senate waiting for approval. Jodey Arrington, R-Texas, introduced the bill into the House and said it, among other things, 'unlocks American energy dominance.'
People working in Indiana's clean energy sector disagree, saying the changes would hurt thousands of Hoosier home owners and workers employed in the solar industry.
Zach Schalk, senior Indiana program director for Solar United Neighbors Action, said the Senate should not approve the bill as it is currently written.
'The bill is a devastating step in the wrong direction,' Schalk said. 'It's going to make the air dirtier and our water less clean. It's going to make Hoosiers sicker and it's just not good policy for anybody.'
There are roughly 4,000 solar jobs in Indiana that could be at risk if the federal government cuts these tax credits, according to data from the Solar Energy Industries Association.
Schalk and Solar United Neighbors work with homeowners interested in going solar. Hoosiers building solar projects at home have been able to take advantage of a 30% tax credit on those purchases. The cost-saving incentive originally was set to end 2034, but the House's proposed budget would end it nearly a decade early this December.
Installing residential solar is not cheap, and projects costs widely vary but can add up to more than $20,000. The Residential Clean Energy Tax Credit provides homeowners certainty by allowing them the ability to plan a budget, Schalk said.
Homeowners who are planning for a solar project that won't be complete until 2026 will find their projects 30% more expensive if the bill is signed into law as written.
'And in Indiana, we don't have meaningful local solar incentives,' Schlak said. 'This federal tax credit is really an essential component for Hoosiers who want to go solar.'
The solar industry already has suffered direct attacks from state policy like the end of net metering, Schlak said, which raised the price of going solar and caused uncertainty in the market.
The loss of the credits also affects homeowners buying battery storage for their residential solar arrays. Battery systems also received a 30% credit, which saved Hoosiers thousands of dollars.
Darrell Boggess, a Bloomington resident, was an early adopter of solar power for his home and said tax credits are a large motivator for these expensive purchases.
'If the tax credits disappear, then the price increases by about a third and most people, including me, are price sensitive,' Boggess said. 'So, if it costs more you just don't think about buying it.'
Boggess not only fitted his home with solar panels, but purchased heat pumps, too. These systems are energy-efficient substitutes for the standard heating and cooling systems found in most homes.
'When it was below zero outside I was getting 90-degree air into the house and the temperature inside stayed constant,' Boggess said.
The solar panels, heat pumps and other upgrades have saved Boggess money. The work also has made him pay closer attention to the amount of energy his home uses.
Household appliances, like Boggess's heat pump, meant to help homeowners reduce energy use and save on bills, could also lose federal tax credits under the House bill.
The Energy Efficient Home Improvement Credit provides homeowners up to $3,200 in tax credits for various new appliance purchases and other expenses with a 30% credit.
Rewiring America's CEO Ari Matusiak said about 64,000 households in Indiana used these tax credits in 2023 and saved meaningful amounts of money on their energy bills. Matusiak and Rewiring America work to help homeowners save money by going electric. The organization's research shows that if all Hoosiers upgraded their energy efficiency, Indiana would save about $3 billion each year on energy bills.
Based on Rewiring America's research about a quarter of Indiana's households rely on delivered fuels like propane to heat their homes or use inefficient electric heaters like the type that run along baseboards, Matusiak said. These homes could benefit from energy efficiency tax credits and end up saving around $3,840 every year on their energy bills.
'This is a big deal in terms of the impact of these tax credits on energy costs,' Matusiak said. 'Energy costs are rising for families and nationally they've gone up over 30 percent over last four years.'
This is a strange moment, Matusiak said, because we are having a conversation about energy affordability and the amount of energy on the grid, but these credits help grid capacity and save individuals thousands of dollars on energy bills.
'This is not the thing to be taking aim at if you're worried about those kinds of things and that's why we want to make sure people know about it,' he said.
Cutting the tax credits will not only affect Hoosiers paying utility bills, but the local jobs the credits help support cannot be offshored, Matusiak said.
Bradley Stroot owns Tuttle Heating and AC, a residential HVAC company based in Bloomington. Stroot's company focuses on installing and servicing high efficiency heat pumps in Monroe and the surrounding counties.
The 30% tax credit has made homeowners Stroot worked with much more likely to install these heat pumps, he said. The high efficiency systems often save enough energy over their lifespan that the upfront costs are worth paying. Heating and cooling a home typically makes up about half of the homeowner's energy bill, he said, and even modest increases in efficiency can mean significant savings over time.
'If Congress chooses to get rid of these tax credits it will come at the detriment of both homeowners and small businesses like ours,' Stroot said. 'A significant portion of our business is related to installing and servicing heat pumps, many of which qualify for $2,000 tax credits.'
The One Big Beautiful Bill Act is now in the U.S. Senate waiting on any changes before a vote. The Senate Finance Committee released its version of the draft bill June 16, and the committee is still considering cutting the incentives.
Sen. Todd Young's spokesperson Leah Selk said in an email to IndyStar that Young's office didn't have anything to share about the clean energy tax credits. "Senator Young continues to have conversations with his colleagues and stakeholders about improving the House-passed bill and addressing our nation's debt and deficit challenges," Selk wrote.
Sen. Jim Banks did not respond to IndyStar's request for comments.
'(The bill) does not make any sense from our perspective,' Matusiak said. 'It's not a good policy decision, and certainly not good for individuals. People should let their elected officials know that.'
IndyStar's environmental reporting project is made possible through the generous support of the nonprofit Nina Mason Pulliam Charitable Trust.
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