Eben Perkins stands near the outdoor heat pump unit at his South Portland home last winter. The U.S. Treasury Department says 4% of Maine taxpayers claimed a tax credit for at least one form of climate-friendly home improvement – including switching from oil or propane heating to an electric heat pump – in 2023, slightly higher than the 2% to 3% rate nationwide. Brianna Soukup/Staff Photographer, file

American taxpayers claimed more than $8 billion in credits on their 2023 returns – more than twice government projections – for making climate-friendly upgrades to their homes under the Inflation Reduction Act, the Treasury Department reported Wednesday.

The 2022 law dedicated roughly $370 billion to curbing harmful emissions and promoting green technology, as well as investments in health care and other components of President Biden’s economic agenda. It also included an array of tax credits and rebates for energy-efficient residential improvements. The nonpartisan congressional Joint Committee on Taxation estimated the first-year costs of those incentives at $2.4 billion. In the next two years, it estimated that people would claim more than $4 billion per year in credits.

Instead, data shows, more than 3 million households claimed $6 billion in credits for solar panel installation and related projects, as well as $2 billion for other home improvements such as new windows and air-conditioning systems.

“The reality is, the American people want to adopt solar panels, heat pumps and electric vehicles, and the federal Inflation Reduction Act is helping them do it,” said Leah Stokes, a political scientist at the University of California at Santa Barbara who advocated for the climate credits in the law.

Other credits in the Inflation Reduction Act, such as those made available to buyers of electric vehicles and certain companies, have also proved much more popular than anticipated.

The average household that installed solar panels or made related improvements, such as buying batteries for solar energy storage, claimed just over $5,000 in tax credits; these incentives were capped at 30% of the project’s cost. A separate credit provides a smaller tax break for such upgrades as energy-efficient windows or insulation.

During a call Tuesday with reporters, Biden administration officials emphasized the savings that consumers would realize by switching to more efficient power. The typical household saves more than $2,000 a year after installing solar panels and between $1,000 and $3,000 by switching from oil or propane heating to an electric heat pump, they said.

Based on conversations with companies that sell solar panels and other technologies, Deputy Treasury Secretary Wally Adeyemo said, he expected even more households to claim the credits this year, especially as more people become familiar with them. Though the credits existed before the Inflation Reduction Act, the law made them more generous and expanded access to credits that had already expired or were set to expire.

In most states, 2% to 3% of individual and family taxpayers claimed a tax credit for at least one form of climate-friendly home improvement in 2023. The rate was 4% in Maine, New Hampshire and Vermont – places where heat pumps have become a popular alternative to costly fuel oil, aided by the states’ own generous rebates and credits for buyers. Oklahoma and West Virginia were the only states with rates below 2%.

Though nearly half the households that claimed the credits reported annual income below $100,000, the credit uptake was more common higher up the income scale. More than 1 in every 20 households in income brackets higher than $100,000 claimed the credit, despite the fact that some of the credits limited eligibility for higher-income households.

“The focus of our outreach has been around Americans who have to deal with the cost of energy,” Adeyemo said. “We’re going to continue to focus our outreach efforts on middle-class and working-class Americans, with the hope that all eligible Americans will take advantage of these tax credits.”

For climate experts, a major question is whether the tax credits are spurring people to make purchases they wouldn’t otherwise make.

“To understand the effectiveness of something like that, you have to have a good idea of what a counterfactual might be. Some people who are going to take these tax credits would have perhaps made these investments anyway,” said Karen Palmer, an environmental economics expert at Resources for the Future. “It’s especially difficult the very first time we have numbers here to make inferences about what the IRA has done.”

She noted, for example, that the lower number of people buying heat pumps compared with other technologies might not be a reflection of the effectiveness of the tax credit alone – some people who want to buy heat pumps are on a waiting list because of supply chain issues or a lack of trained and qualified professionals to install them.

Rhodium Group, which has been monitoring spending on climate technology for years, published a report Wednesday that showed spending on heat pumps, solar panels and batteries has remained relatively flat in recent years, while consumer purchases of electric vehicles have soared.

“Certainly the hope of the administration and Democrats in Congress at the time of the IRA’s passage was that this would really significantly affect the pace of heat pump installation,” said the report’s leader, Michael Delgado. “The total number of heat pump installations have been pretty flat, but that’s been against the overall decline in total HVAC installations and home renovations generally. They have been gaining market share.”

A host of factors might be contributors, not just the tax credits. Stokes pointed out that Congress probably underestimated how many people would claim credits because lawmakers didn’t know that several states and cities would pass their own climate rebate programs, making it even more appealing for people in some localities to install heat pumps. Adeyemo said he hoped further public education would encourage more people to buy heat pumps.

“There’s been so much going on in the market at the same time,” Delgado said. “When you’re talking about solar or electric vehicles or batteries, the cost of the technology has been declining so much over the past couple years. Really teasing apart (the effect of the tax credits) is challenging.”

Sara Baldwin, who leads research on decarbonization at Energy Innovation, pointed out that earlier tax credits show a history of directly spurring people to make climate-friendly purchases.

“We’ve seen a yo-yo up and down in the past suggesting that these tax credits do have a stimulating effect on the market and encouraging more uptake and adoption than would otherwise happen in their absence. I think that’s especially true for individual homeowners, residential customers,” she said.

Baldwin also predicted that increased purchases of new technologies will have good ripple effects beyond just the buyers’ households.

“As we see growth of technologies, whether you’re talking about heat pumps or electric vehicles, the initial adopters always drive economies of scale, which helps reduce the cost for future adopters,” she said. “You have better workforce that knows how to install them and build them. … All of the costs start to come down gradually.”

Washington Post writer Jeff Stein contributed to this report.