Inflation Reduction Act Could Benefit Colorado Builders


2022’s Inflation Reduction Act (IRA) could bring some good news for builders in 2023 and beyond, according to analysts.

The act contains $500 billion in new federal spending, much of which is aimed at increasing energy efficiency and reducing carbon emissions. It provides a wide range of tax credits for homeowners who install solar panels and other energy-efficient products, including windows, water heaters, HVAC systems and heat pumps. It also offers tax credits for the purchase of energy-efficient residential and commercial properties as well as the construction of new energy-efficient homes.

A study by the University of Massachusetts Amherst Political Economy Research Institute (PERI) found that the act could create more than 9 million jobs nationwide over the next 10 years. In Colorado, PERI estimates the building sector will see a $1.7 billion increase in spending over the next 10 years because of the bill, creating 15,497 additional building-related jobs.

Ben Johnston, chief operating officer at Kapitus, a financing provider for small- and medium-sized businesses, says the IRA could be a bright spot in what looks to be an otherwise tough year for builders. Rising interest rates will weigh heavily on the housing market this year, likely depressing both home and commercial sales and making it more expensive to finance new construction, he says. The inflation, supply chain, and labor pressures of 2022 will likely continue too.

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But “the act is likely to provide significant business to residential contractors with expertise in installing energy-efficient HVAC systems as well as home builders that specialize in energy-efficient construction,” he says.

Johnston says builders can maximize the opportunity by learning about the construction techniques and energy systems that qualify for tax credits and tailoring their services and product offerings to match.

“Educating customers on the potential tax and energy savings of these products, while showing them how to qualify for tax rebates, is likely to drive quality business while inspiring customers to invest more in their home,” he says.




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