BOSTON: U.S. Treasury Secretary Janet Yellen said on Wednesday that more work was needed to lower living costs for Americans but the Biden administration’s clean energy tax credits will help save people money and shield them from future price volatility in fossil fuel energy.
Yellen, on a visit to a Boston community college to make a sales pitch for Inflation Reduction Act tax credits, said Biden administration policies have left Americans wealthier than they were before the COVID-19 pandemic despite inflation, adding that the median-income family can now afford the same basket of goods as in 2019 with $1,000 to spare.
“But despite how far we’ve come, we know significant work remains to be done. For too many families, prices for goods that matter - such as groceries, rents, and prescription drugs - are high,” Yellen said in remarks at Roxbury Community College.
“At the Treasury Department and across the Administration, we’re using all tools at our disposal to bring these costs down so that families have more breathing room,” Yellen added.
Yellen sees ‘resilience’ in US economy even as it cools
Biden has struggled to win credit from voters on his handling of the economy due to persistent inflation over the past two years, which is now easing. Yellen has said that as wage increases outpace prices, Americans will start to feel more confident in their financial situations.
Using clean energy tax credits are one area where Americans can mitigate the high and volatile cost of fossil fuels, which can bring “acute” financial pain for low-income and middle-class families, Yellen said.
Massachusetts households using natural gas for heat will spend $900 this winter, while those using heating oil will spend over $2,000 – a bill that can be cut in half by switching to an electric heat pump, Yellen added.
But such conversions, particularly in Massachusetts where oil heat is prevalent in older homes, can costs tens of thousands of dollars.
The IRA, passed in August 2022, allows families to receive a $2,000 tax credit for installing an electric heat pump to replace oil or gas furnaces, and they can receive a tax credit of up to $1,200 for installing energy efficient windows. The legislation also allows for tax credits of up to $7,500 to offset the cost of electric vehicles.
“You can also discount by up to 30 percent the cost of putting solar panels on your roof or batteries in your garage to store the energy those panels produce,” Yellen said.
Her comments come as the Internal Revenue Service is preparing to launch this year’s tax filing season for 2023 income, when many Americans and businesses will claim tax credits for energy upgrades and other investments.
Yellen toured Roxbury Community College’s Center for Smart Building Technology, which is training students to install and operate clean energy systems and building automation.
Officials at the college said graduates can earn more than $60,000 to start and earn more than $100,000 within a few years without a four-year degree.
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