Severin Borenstein and Lucas Davis “The Distributional Effects of U.S. Tax Credits for Heat Pumps, Solar Panels, and Electric Vehicles” (Revised October 2024) | WP-348R | Blog Post
Abstract:
U.S. households have received over $47 billion in tax credits since 2006 for heat pumps, solar panels, electric vehicles, and other “clean energy” technologies. Using information from tax returns, we show that these tax credits have gone predominantly to higher-income filers. The bottom three income quintiles have received about 10% of all credits, while the top quintile has received about 60%. The most extreme is the tax credit for electric vehicles, for which the top quintile has received more than 80%. These patterns have changed little over time. We then present evidence on cost effectiveness and discuss broader economic considerations.