In August 2022, President Biden signed into law the Inflation Reduction Act of 2022 (IRA), which has been hailed as one of the nation’s most significant pieces of legislation relating to environmental sustainability and energy reduction. Additionally, the legislation includes $25 billion across six program areas to invest in the quality, health, and resilience of our nation’s housing and communities. These funds come at a critical time as rural, urban, and suburban communities across the U.S. struggle with high costs of housing and energy, coupled with overall inflation. Many of the programs in the IRA, including those highlighted here, are part of the Administration’s Justice40 Initiative, which directs 40% of the overall benefits of certain Federal programs to disadvantaged communities. 

These funds will be especially significant for helping jurisdictions invest in physical and financial resilience and to mitigate the risk of natural disasters and economic challenges alike. It also provides a focus on investing in housing and communities as a tool for health equity. A key focus of the IRA is that it acknowledges inequities due to past energy, transportation, and infrastructure policies that negatively impacted disadvantaged communities. The programs in the IRA focus on mitigating those inequities through community-driven programs, workforce training, and by directing benefits to low-income residents. 

The IRA invests in a variety of programs and tax credits that incentivize renovations and energy efficiency in housing. These programs are administered by five different agencies: 

• US Department of Energy (DOE)
• US Department of Housing & Urban Development (HUD)
• US Department of Transportation (DOT)
• US Environmental Protection Agency (EPA)
• Internal Revenue Service (IRS) 

The programs in the IRA are vast and the funding substantial. Due to the web of programs, different agencies, and complex guidance, government entities will need to be prepared to effectively access the funds and use them to their full potential. Some of these programs will span state agencies and require significant coordination alongside new delivery infrastructure. It is essential for state and local governments to prepare now to maximize the impact and leverage this historic legislation to make the funds available for the people and communities they serve.

Read more: Groundbreaking New Funds for Housing and Communities in the Inflation Reduction Act