Sponsors (5)
The bill offers targeted, temporary tax relief to lower energy burdens for eligible households but excludes the poorest (nonrefundable), some moderate‑income and very high‑usage households, and expires after 2027.
Low- and middle-income taxpayers with qualifying home heating/cooling costs receive a tax credit covering 75% of expenses above 3% of MAGI (capped at $1,500 per filer / $3,000 per joint return), lowering their federal tax owed and reducing net household energy costs.
Households with an energy burden—particularly those not receiving government energy subsidies—are prioritized because the credit excludes subsidized amounts and uses a MAGI threshold, concentrating benefits on those with actual out-of-pocket heating/cooling costs.
Taxpayers facing high energy bills receive near-term relief for taxable years 2025–2027, helping lower household cost pressure during periods of elevated energy prices.
Very low-income households with little or no federal income tax liability may receive little or no benefit because the credit is nonrefundable.
Households with very high seasonal energy use or in extreme climates may still face large unmet energy bills because the $1,500/$3,000 caps may not cover total costs.
Some moderate-income families with MAGI above $75,000 (single) / $150,000 (joint) who nevertheless face high energy costs are excluded and will not receive relief.
Based on analysis of 2 sections of legislative text.
Introduced January 13, 2026 by Chris Pappas · Last progress January 13, 2026
Creates a new individual tax credit that covers 75% of qualified home heating and cooling expenses that exceed 3% of a taxpayer's modified adjusted gross income (MAGI). The credit is capped at $1,500 for single filers and $3,000 for joint filers, is limited to taxpayers with MAGI at or below $75,000 (single) or $150,000 (joint), and excludes expenses reimbursed or subsidized by government programs. The credit applies to taxable years beginning after December 31, 2024, and terminates for taxable years beginning after December 31, 2027. The bill adds the new credit to the Internal Revenue Code and makes conforming edits to tax code tables and an item noted in 31 U.S.C., with some insertion text not provided in the excerpt.