2021 Incentives to Go Green

By Jenevra Wetmore

If you have been considering making a “green” change in your life, 2021 might be the year for you. This is because every New Year brings changes to state and federal incentives to cut carbon emissions. From solar panels to home weatherization, there are tax incentives and money back deals to get you started on all types of green projects. These incentives may decline as time goes on–indeed, some are set to drop as soon as 2022–so it is best to lock in savings and tax credits while you can. Read on for some of the opportunities available to Vermonters right now:


The federal Investment Tax Credit (ITC), which was scheduled to drop from 26% to 22% in 2021, will stay at 26% for two more years. The ITC is a tax credit that can be claimed on federal income taxes for 26% percentage of the cost of a solar photovoltaic (PV) system. This tax credit is available for solar residential and commercial solar, and has helped the solar industry grow quickly since 2006. However, the Vermont Public Utilities Commission will cut state solar incentives. The net-metering rate will be reduced by 2 cents per kilowatt-hour on Feb. 1, followed by an additional 1₵/kWh on Sept. 1. For those who are unfamiliar, net metering is a program that allows members to connect renewable energy systems to the grid and receive credit on their electric bills for the power that system generates. These cuts mean that owners of solar systems will earn fewer net metering credits.

Advanced Wood Heat

For the first time, a 26% investment tax credit applies to the installed cost of home heating and hot water systems that utilize wood pellets, chips and cordwood. The systems must have a federal rating of 75% efficiency or above. With this new credit, homeowners who install one of these wood heating systems can take 26% of the installation cost off their tax liability for the year. This percent will drop to 22% for 2022.

Geothermal Heat Pumps

The 26% tax credit was extended for geothermal heat pump projects that begin construction in 2021 and 2022. In other words, 26% percent of the amount a homeowner spends on purchasing and installing a geothermal heat pump system can be deducted from federal tax liability. This percent will decrease to 22% in 2023.

Home Weatherization

The Home Performance with Energy Star (HPwES) program connects homeowners and certified contractors to assess home energy use and perform energy improvements. Currently homeowners can receive 50% of project cost back, up to $1,000. Income-eligible Vermonters can receive 50% of project cost back, up to $3,000. Details at www.efficiencyvermont.com/rebates/list/home-performance-with-energy-star.

EV Cars

Drive Electric Vermont’s website details incentives for those looking to buy or lease an EV. Along with the federal incentive of up to $7,500 depending on the size of the battery and your annual tax liability, the state also offers up to $4,000 for income-eligible Vermonters purchasing or leasing a new electric vehicle. The State of Vermont allocated $950,000 for additional incentives in November 2020. Of those funds, roughly $683,500 remain. If you are thinking of going electric, make sure you act before funding runs out. For more information visit www.driveelectricvt.com.

DIY Weatherization

This winter, Cover Home Repair will not be visiting homes in person due to COVID-19. Instead, they are offering DIY weatherization kits. These kits are available to everyone, and are free for low-income residents. Materials that Cover can offer include: indoor shrink window kits, weatherstripping for outside doors, caulk, expanding foam, foam light switch gaskets, LED lightbulbs, and more. Info can be found at: https://coverhomerepair.org/home-repair/weatherization-tips/

Incentives can be confusing to understand, but they are there to help and encourage us to do the right thing. If we are going to achieve 90% renewable by 2050, we will need a widespread effort to change our energy use. On average, each Vermonter is responsible for over 15 tons (30,000 pounds) of greenhouse gas emissions of air pollution per year. Incentives by themselves aren’t the perfect solution, but these programs can help each of us reduce our 15 tons of carbon.

The author purchased this hybrid sedan in early 2021 through Drive Electric Vermont’s incentives program, and is averaging 48 miles per gallon. Photo: Jenevra Wetmore

Action Steps:

  • Tell your local legislators and the Vermont Public Utility Commission (PUC) to increase–not decrease–the rates paid for net metering.
  • There is currently a 500kW cap on solar credits allowed for municipalities, which often means that towns cannot meet their energy needs with solely net metering. Tell your local legislators and the Vermont Public Utility Commission (PUC) to increase the 500kW cap to allow municipalities to meet more of their energy needs with solar.


Learn more about our Vermont Standard articles.