President Biden signed into law Tuesday the Inflation Reduction Act of 2022, a health care, climate, and tax bill opposed by the NAHB. According to the NAHB, the bill “fails to ease inflationary pressures on housing and contains troublesome new building and energy code requirements that could raise the cost of housing for homeowners and renters.”
Shortly after the legislation was introduced, NAHB chairman Jerry Konter issued a strong rebuke of the bill and the association submitted a letter to Senate leaders expressing opposition. The NAHB said the bill contained several changes to the taxation of real estate and code requirements that “would exacerbate the nation’s affordability challenges.”
“The legislation does nothing to address the housing supply crisis facing American families,” a letter from the NAHB to House Democratic and Republican leaders stated. “Rather, the bill will disincentivize multifamily construction, increase the cost of new homes through higher energy code requirements, and inflate labor costs.”
On its website, the NAHB outlined several of the new code requirements and tax changes that impact the housing sector.
The legislation contains $1 billion in grants to incentivize state and local governments to adopt more stringent energy code regulations. According to the NAHB, “the practical effect” of these grants will raise housing costs “even further while doing very little to provide meaningful savings for residential homes and apartments.” Two-thirds of the funds will be made available for the adoption of energy regulations that meet zero-energy provisions in the 2021 International Energy Conservation Code; however, the NAHB said these zero-energy targets “are not appropriate for most jurisdictions and not cost-effective for consumers.”
The bill also includes structural changes to the Section 45L new energy efficiency home tax credit, which provides builders a $2,000 tax credit on homes by meeting specific energy savings. However, NAHB said the nature of the change “would effectively render the tax credit null and void for most builders.”
“Changing the rules to make Energy Star the sole means to qualify for the 45L tax credit is counterproductive because it is a niche market that will never be widely adopted—less than 10% of single-family and multifamily units were certified in 2020,” the NAHB wrote.
The NAHB said the legislation does include a positive long-term extension for many existing energy tax incentives and $4.3 billion for the HOMES Rebate Program, an energy-efficient retrofit program.
