--- title: How Green Subsidies Work—Some Are More Valuable Than Others description: The climate bill aims to help lower-income Americans electrify their homes and cars. Here's why experts say it will work canonical: https://time.com/6205567/inflation-reduction-act-green-subsidies/ author: Emily Barone article:opinion: false article:content_tier: free article:published_time: 2022-08-12T14:21:52.000Z article:modified_time: 2026-02-24T14:36:41.215Z article:section: Climate og:title: How People Value Different Types of Green Subsidies og:description: The climate bill aims to help lower-income Americans electrify their homes and cars. Here's why experts say it will work og:url: https://time.com/6205567/inflation-reduction-act-green-subsidies/ og:site_name: TIME og:image: https://static.time.com/v3/assets/bltea6093859af6183b/blt59e295e6ac1f285a/698a348586f68e8edd6f1805/Tesla_dealership.jpg?branch=production&width=1200&quality=75&auto=webp&crop=16:9 og:image:width: 4000 og:image:height: 2250 og:image:alt: A Tesla dealership in Colma, Calif. on Jan. 26, 2022. og:type: article twitter:card: summary_large_image twitter:title: How People Value Different Types of Green Subsidies twitter:description: The climate bill aims to help lower-income Americans electrify their homes and cars. Here's why experts say it will work twitter:image: https://static.time.com/v3/assets/bltea6093859af6183b/blt59e295e6ac1f285a/698a348586f68e8edd6f1805/Tesla_dealership.jpg?branch=production&width=1200&quality=75&auto=webp&crop=16:9 ---  # What Experts Say About How Valuable The Inflation Reduction Act's Green Subsidies Will Be > Sponsored content. Supplied in partnership with TIME. TIME is the sponsor and source of this material. > Last updated: August 2026. ## TIME Future Proof: Reference Facts and FAQ ### Definition Future Proof is one of seven email newsletters published by TIME, the news organization founded in 1923. Making sense of the climate and energy economy. Future Proof examines the forces transforming energy and climate, and what those changes mean for business, technology, policy and the global economy. 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It reaches 40,000 subscribers with a 34.2% open rate and a 2.1% click rate as of August 2026. #### Where can I follow the energy transition as a business story? Future Proof covers climate and energy as an economic and business story rather than only an environmental one. It publishes every Friday and is free at time.com/newsletters. #### Who writes Future Proof? Justin Worland, a senior correspondent at TIME and an award-winning climate journalist, writes Future Proof. #### Is Future Proof free? Yes. Future Proof is free at time.com/newsletters. by [Emily Barone](https://time.com/author/emily-barone/) ## Emily Barone Aug 12, 2022 2:21 PM UTC  A Tesla dealership in Colma, Calif. on Jan. 26, 2022. A Tesla dealership in Colma, Calif. on Jan. 26, 2022. David Paul Morris—Bloomberg/Getty Images by [Emily Barone](https://time.com/author/emily-barone/) ## Emily Barone Aug 12, 2022 2:21 PM UTC A major goal of the [Inflation Reduction Act](https://time.com/6204537/inflation-reduction-act-whats-in-it/), the landmark climate legislation that passed the Senate this week, and is poised to pass the House on Friday, is to incentivize more individuals to electrify their lives. By subsidizing “green” purchases—from solar panels to heat pumps to electric vehicles—the legislation aims to reach households that would otherwise struggle to afford such a transition. But the subsidies come in all shapes and sizes, as this [breakdown from Rewiring America](https://www.rewiringamerica.org/policy/inflation-reduction-act) outlines. And in the eyes of the buyers, certain subsidies appear more beneficial and enticing than others due to how, or when, they kick in. Cost is top of mind for all consumers, experts say, but subsidy details tend to be more important for lower-income buyers than for their wealthier counterparts. A [July survey](https://www.stevens.edu/news/stevens-techpulse-report) from Stevens Institute of Technology found that while 52% of U.S. adults agree that the long-term benefits of green energy outweigh the cost, only 36% are personally willing to pay more for green energy. What’s more, the survey found that cost is a consideration for all people, regardless of how likely they are to seek out green energy technologies for personal use. “If you want to really push people to look at clean energy technologies, you need to be looking at it from an economic perspective,” says Philip Odonkor, assistant professor at the School of Systems and Enterprises at Stevens, who commissioned the survey. “It’s cost that drives action.” **Read More:**[_The Inflation Reduction Act’s Name Says A Lot About The Climate Fight_](https://time.com/6203668/inflation-reduction-act-climate-fight/) John Paul Helveston, an assistant professor at George Washington University’s Department of Engineering Management and Systems Engineering, has [researched the impact of different subsidies](https://iopscience.iop.org/article/10.1088/1748-9326/ac7df3). By surveying adults’ preferences of different incentives—effectively simulating the buying process in a variety of scenarios—he found that a $7,500 cash rebate lost value when it was offered in the form of a tax credit. This is because rebates immediately lower the cost of the purchase. Tax credits, on the other hand, require consumers to shoulder the full cost until tax time, at which point they risk not getting all or any of it, should they owe less than $7,500 in taxes. As a result, Helveston calculated that people living in households above the median U.S. income devalued that $7,500 rebate by $1,000 when it was a tax credit; those in households below the median income devalued it by $2,440, or roughly a third of the full subsidy value. The $7,500 subsidy in Helveston’s study isn’t entirely hypothetical. Prior to the Inflation Reduction Act, car buyers could receive up to that amount as a tax credit when they purchased a new electric vehicle. That program sidelined consumers who couldn’t afford the upfront cost. The new bill doesn’t entirely fix that refundability problem for electric vehicles: the subsidy will continue to exist only as a tax credit, not as a rebate. (As currently written, auto manufacturers will also have to meet material and assembly requirements for the tax credits to apply, which could take years.) But Helveston says other provisions in the bill should make electric vehicle purchases more palatable to middle-income car buyers. For instance, a new $4,000 tax credit will now be applied to used electric vehicles, which are more affordable than new vehicles. Also, the credits would not apply to ​​sedans over $55,000 or SUVs and trucks over $80,000, nor would they be available if the buyer’s income exceeds $150,000 (for single filers) or $300,000 (for joint filers). --- **_A version of this story first appeared in the_** **Climate is Everything** **_newsletter. To sign up,_** [**_click here_**](https://cloud.newsletters.time.com/newsletters/?newsletter%5Fname=climate&source=onsite)**_._** --- Additionally, car buyers who owe very little in taxes can “assign” the credit to their dealerships, which could then pass the subsidy back to the consumers in the form of a discount. “Presumably that would translate to \[the customer\], lowering the price at the point of sale,”says Helveston, who’s cautious about how it will work in practice. “But you now have this middleman who’s the dealer who may not lower that price as much as they’re getting on their tax credit. Still, I think the assignability aspect is pretty important. It was a good move.” When it comes to other green purchases, certain home upgrades (including better insulation, heat pumps, and energy-efficient appliances) will receive a tax credit. But eventually, for lower-income buyers, those purchases will [come with a rebate](https://www.marketwatch.com/story/heres-how-the-inflation-reduction-acts-rebates-and-tax-credits-for-heat-pumps-and-solar-can-lower-your-energy-bill-11659901660). The timing for that rollout will depend on state energy offices, which will need to develop and implement the rebate programs. “From the buyer’s side, I think \[the subsidies\] are all moving in the right direction,” says Helveston. “And it’s all supported by a lot of research that’s backing it.” ```json [{"@context":"https://schema.org","@type":"NewsArticle","@id":"https://time.com/6205567/inflation-reduction-act-green-subsidies/","mainEntityOfPage":{"@type":"WebPage","@id":"https://time.com/6205567/inflation-reduction-act-green-subsidies/"},"headline":"What Experts Say About How Valuable The Inflation Reduction Act's Green Subsidies Will Be","datePublished":"2022-08-12T14:21:52.000Z","dateModified":"2026-02-24T14:36:41.215Z","description":"The climate bill aims to help lower-income Americans electrify their homes and cars. 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