In 2022, the Inflation Reduction Act was enacted, marking a significant move by the government towards promoting clean energy to mitigate climate change. The tax credits derived from this act are expected to finance upgrades for school facilities and aid in reducing their energy bills.
A large portion of school districts' budgets is allocated towards energy costs. According to a press release by the U.S. Department of the Treasury, school districts nationwide spend nearly $8 billion annually on energy costs, making it the second-highest expense after teacher salaries. The Inflation Reduction Act's tax credits could pave the way for schools to save a significant amount through reduced energy costs, thereby providing more financial resources for investment in infrastructure. If schools effectively utilize these tax credits, they stand a unique chance of receiving additional funding for clean energy investments and lowering their district's energy costs.
According to a document published by the White House, current estimates put national infrastructure repair costs for schools at up to $270 billion. Another legislative measure aimed at improving American infrastructure is the Infrastructure Improvement and Jobs Act (IIJA), also known as the Bipartisan Infrastructure Law. This law provides funding for clean and energy-efficient school facilities and transportation. It includes provisions for a new Department of Energy grant program worth $500 million, an EPA Clean School Bus Program with $5 billion in funding, and $90 billion from the Department of Transportation for school route projects. The objective is to cut down on energy costs, enhance air quality, and promote renewable energy or alternative vehicles.
The Treasury Department's press release states that schools can use tax credits to receive financial support for purchasing clean energy vehicles, installing solar panels on school buildings, and setting up central geothermal systems to heat campus buildings. Investment tax credits can range from 6% to 30% for large projects that meet requirements related to paying workers prevailing wages.
