This act establishes a refundable tax credit for individuals to offset high home energy costs exceeding 3% of their income, up to a maximum of \$1,500 annually.
Chris Pappas
Representative
NH-1
This bill establishes the **Energy Burden Tax Credit Act** to provide financial relief to individuals facing high home energy costs. The credit covers 75% of a taxpayer's annual fuel or electricity expenses that exceed 3% of their modified adjusted gross income, up to a maximum of \$1,500. This temporary credit is available for tax years beginning after 2024 and before 2028, and is limited to taxpayers with modified adjusted gross incomes of \$75,000 or less.
New Energy Tax Credit Offers Up to $1,500 for Home Heating & Cooling, Starting 2025
Alright, let's talk about something that hits everyone's wallet: those ever-climbing energy bills. We've got a new proposal on the table, the Energy Burden Tax Credit Act, and it’s looking to give some folks a break. Basically, this bill creates a brand-new tax credit, starting in 2025 and running through 2027, aimed squarely at helping individuals with those hefty home heating and cooling costs. If your energy expenses are really eating into your budget, this could put up to $1,500 back in your pocket each year.
Your Wallet's New Best Friend
So, how does this work? The credit, officially called the Energy Burden Credit, is set to cover 75% of what the bill calls your “qualified energy expenses.” Now, here's the kicker: those qualified expenses are only the amounts you spend on fuel or electricity to heat or cool your main home that exceed 3% of your modified adjusted gross income (MAGI) for the year. Think of it like this: if your MAGI is $50,000, that 3% threshold is $1,500. So, if you spent $3,000 on energy, the first $1,500 doesn't count, but the remaining $1,500 does. The credit would then be 75% of that remaining $1,500, which is $1,125. The bill (Sec. 2) specifies that any energy costs already covered by a government program won't count towards this credit, so no double-dipping there.
Who Gets to Cash In?
This credit isn't for everyone, but it's definitely aimed at those who could use the help most. The biggest hurdle is an income cap: if your modified adjusted gross income (MAGI) is over $75,000, you won't be eligible for this credit. This means it's really designed to provide relief to middle and lower-income households feeling the pinch of high energy prices. For example, a single parent making $60,000 a year who lives in an older home with high heating costs could see a significant chunk of change returned to them. On the flip side, if you're pulling in $80,000, or your energy costs are pretty low compared to your income (meaning they don't cross that 3% MAGI threshold), this credit won't apply to you. The bill is pretty clear that it's a targeted benefit.
The Fine Print and the Future
This isn't a permanent fixture; the credit is slated to be available for tax years starting after December 31, 2024, and it's set to expire for tax years beginning after December 31, 2027. So, we're looking at a three-year window for this relief. The bill (Sec. 2) also includes some technical amendments to the Internal Revenue Code to make sure everything fits together smoothly. This temporary nature means it's a short-term fix for a persistent problem, but for those struggling to keep their homes warm in winter or cool in summer, three years of potential savings could make a real difference. It’s a straightforward move to ease a common burden, giving people a bit more breathing room in their budgets during a time when every dollar counts.