Energy Burden Tax Credit Act

Bill Number

H.R. 7044

Origin Chamber

House

Congress

119th Congress, Session 2

Policy Area

Taxation

Status

Introduced

Latest Action

2026-01-13: Referred to the House Committee on Ways and Means.

Last Updated

2026-03-21T08:05:53Z

AI-Generated Summary

Purpose

The Energy Burden Tax Credit Act (H.R. 7044) aims to provide tax relief to individuals facing high energy costs for heating and cooling their homes. It introduces a new tax credit to offset a portion of these expenses, targeting lower- and middle-income households to reduce the financial burden of essential energy use.

Key Provisions

• Credit Amount: Eligible individuals receive a tax credit equal to 75% of "qualified energy expenses" that exceed 3% of their modified adjusted gross income (MAGI) for the year. Qualified expenses include payments for fuel or electricity used to heat or cool the taxpayer's main home (principal residence), excluding any amounts reimbursed or subsidized by government programs.
• Dollar Limits: The credit is capped at $1,500 per taxpayer, or $3,000 for married couples filing jointly.
• Income Limits: No credit is available if the taxpayer's MAGI exceeds $75,000 ($150,000 for joint filers). MAGI is calculated as adjusted gross income (AGI), excluding certain foreign-earned income exclusions under IRS sections 911, 931, and 933.
• Duration and Effective Date: The credit applies to tax years beginning after December 31, 2024, but ends for tax years after December 31, 2027.
• Administration: The credit is claimed against federal income tax liability and integrates into existing IRS processes for refundable credits (like the premium tax credit under section 36B).

Significant Changes to Existing Law

• Adds a new section (36C) to the Internal Revenue Code (IRC) in subpart C of part IV, creating the energy burden credit as a refundable tax credit (meaning it can reduce tax owed to zero and result in a refund for excess amounts).
• Includes conforming amendments to IRC section 6211 (defining deficiencies for tax purposes) and U.S. Code title 31 section 1324 (prohibiting use of certain funds for specific purposes), plus updates to the IRC table of sections.
• This is the first dedicated federal tax credit specifically for residential energy burdens exceeding a percentage of income, building on but distinct from existing energy efficiency credits (e.g., under IRC section 25C for home improvements).

Potential Impacts

• On Citizens: Provides financial relief to households with high energy costs relative to income, potentially reducing energy poverty and improving affordability of utilities. It could benefit millions of low- and middle-income families, especially in colder or hotter climates, by lowering effective energy bills through tax refunds.
• On Government Agencies: The IRS will handle claims, verifications, and payments, increasing administrative workload but using existing refundable credit systems. The U.S. Department of the Treasury may see short-term revenue losses (estimated in billions, though not specified in the bill), offset by the temporary nature of the credit.
• On International Relations: No direct impacts, as the bill focuses on domestic tax policy and U.S. residents.

Main Stakeholders Affected

• Individual Taxpayers: Primarily low- and middle-income homeowners or renters (those with a principal residence) who pay for heating/cooling utilities; excludes high earners above income thresholds.
• IRS and Treasury Department: Responsible for implementing, auditing, and disbursing the credit.
• Energy Consumers and Utilities: Indirectly benefits consumers facing "energy burden" (high utility costs as a share of income); utilities may see stabilized demand but no direct regulatory changes.
• Advocacy Groups: Organizations focused on energy affordability, poverty alleviation, and tax policy (e.g., low-income housing advocates) may support or monitor its rollout.

Notable Legal, Constitutional, or Political Implications

• Legal: As a tax credit, it aligns with Congress's broad authority under the 16th Amendment to impose and adjust taxes. It requires taxpayers to substantiate expenses (e.g., via utility bills), potentially leading to IRS audits for compliance. The temporary sunset clause (ending in 2027) allows for future evaluation and extension without permanent revenue effects.
• Constitutional: No apparent challenges; it promotes equal protection by targeting need-based relief without discriminating by protected classes.
• Political: Represents a bipartisan effort (introduced by Reps. Pappas and Lawler) to address rising energy costs amid inflation and climate concerns. It could influence broader debates on tax equity, energy policy, and social welfare, but its short duration limits long-term fiscal commitments. Potential for expansion if enacted, similar to temporary COVID-era relief measures.

This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.

Sponsor

Rep. Pappas, Chris [D-NH-1]

Cosponsors (4)

Rep. Lawler, Michael [R-NY-17], Del. Moylan, James C. [R-GU-At Large], Rep. Vindman, Eugene Simon [D-VA-7], Rep. Stevens, Haley M. [D-MI-11]

Recent Actions

• 2026-01-13: Referred to the House Committee on Ways and Means.
• 2026-01-13: Introduced in House
• 2026-01-13: Introduced in House

Bill Versions

• Energy Burden Tax Credit Act — issued 2026-01-13 — PDF (3 pages)