Residential Clean Technologies Still Make Sense — Even Without Tax Credits.

The economics of US residential clean technology adoption have shifted dramatically. The One Big Beautiful Bill Act released in summer 2025 ended major tax credits for clean upgrades. The Inflation Reduction Act (IRA)’s 30% credit for rooftop solar, up to $2,000 credit for air-source heat pumps (ASHPs), and up to $7,500 credit for electric vehicles (EVs) are no longer available to offset up-front costs, increasing the effective cost of these technologies for many households.

Despite these changes, many state and local governments have set goals to leverage clean technologies to reduce both emissions and costs for residents. Through EPA’s Climate Pollution Reduction Grant program, more than 200 state and local governments published Preliminary Climate Action Plans in 2025, many of which identified residential clean technologies as key strategies for achieving decarbonization goals.

As policies and market conditions continue to evolve, one central policy question remains:

Given today’s cost and performance, which residential clean technologies deliver the greatest greenhouse gas (GHG) emissions reduction and/or household cost savings in my community?

To answer this question, we used RMI’s Green Upgrade Calculator to evaluate three key technologies (electric vehicles, air-source heat pumps, and rooftop solar) across the most common home archetypes in all US states and climate zones. This analysis examines both emissions reduction potential and total household cost impact across electricity, natural gas, propane, fuel oil, and gasoline. The results show that clean technologies can still deliver meaningful emissions reductions and household cost savings, even without federal tax credits. They also reveal clear, location-specific insights that can help state and local policymakers target limited resources where they will have the greatest impact.

Clean technologies can still deliver meaningful emissions reductions and household cost savings, even without federal tax credits.

Two lenses for prioritization: Emissions reduction and cost savings

State and city program designers often weigh two things: which technology delivers the most emissions impact, and which delivers the most savings for residents. Now that federal subsidies are no longer available, both questions remain worth examining on their own terms.

On the emissions side, EVs deliver the largest average annual GHG emissions reduction in the majority of states compared to the other residential clean technologies, reducing residential transportation emissions by an average of 51% compared with a gasoline car. ASHPs lead in the Northeast and Midwest, where they lower average annual GHG emissions by 40% when displacing high-emissions fossil fuels such as fuel oil and propane. Several states, including Colorado, Missouri, Montana, Oregon, and Tennessee, show comparable emissions reduction potential between ASHPs and EVs. Hawaii stands apart: rooftop solar delivers the greatest emissions impact there, given the state’s exceptionally carbon-intensive grid.

The cost savings picture tells a related but distinct story. When considering both up-front costs and ongoing operating expenses, EVs again lead across much of the West, while ASHPs deliver the greatest average annual savings across most of the South if switching from electric resistance heating. Notably, in many Southern states, the cost-effectiveness advantage shifts from EVs to ASHPs, meaning residents in these regions currently heating with electric resistance can achieve greater cost savings through heat pump upgrades, even though EVs reduce more emissions. Rooftop solar emerges as the savings leader in a handful of states, particularly in the Northeast, California, and Florida, driven by high electricity prices, strong net metering policies, and/or abundant sunlight. Missouri, Oregon, and Vermont, show comparable cost savings across multiple technologies.

Understanding the results: Key drivers by technology

The regional patterns on both maps are driven by multiple underlying factors. Understanding those drivers helps program designers move from “which technology leads here” to “which households should we target and why.” Each technology has a distinct logic worth unpacking.

Electric vehicles

EVs deliver strong emissions reductions primarily because they avoid the high carbon intensity of gasoline and are far more efficient than gasoline vehicles. For example, light-duty EVs can achieve 130 miles per gallon of gasoline equivalent, compared to about 25 miles per gallon on average across all light-duty models. As grids continue to decarbonize, these emissions reduction impacts are expected to increase over time.

The lifetime economics of EVs are shaped by two factors above all else: the local spread between electricity and gasoline prices and the average annual mileage per state. EVs have a lower total cost of ownership (including up-front and operating costs over time) where gasoline prices are high relative to electricity, although the economics remain cost-competitive across a wide geography. Lower maintenance costs add to the advantage: no oil changes, fewer moving parts, and reduced brake wear. In 18 states, EV drivers can reduce their total costs of ownership by more than $5,000 over 10 years compared with gasoline vehicle drivers. Those savings compound with greater vehicle use, making EVs particularly attractive for high-mileage households.

Air source heat pumps

The emissions and savings impact of ASHPs depends heavily on what heating system a household is currently using. Homes with electric resistance heating offer the strongest affordability returns and environmental benefits in the South. Because heat pumps are roughly three times more efficient than electric resistance systems, they can substantially reduce electricity use, lower monthly energy bills, and contribute to emissions reductions. Homes that rely on delivered fuels such as fuel oil or propane also represent a high-value opportunity, especially in the Northeast. In these households, heat pumps can provide meaningful financial relief, generating average annual lifetime savings of up to $1,100, while also reducing emissions and improving indoor air quality. These household types are therefore high-priority targets for ASHP programs on both emissions and savings grounds.

Rooftop solar

On its own, rooftop solar often delivers smaller annual emissions reductions than EVs or heat pumps because it does not directly replace fossil fuel use in buildings or transportation. Instead, it reduces emissions by offsetting grid electricity, meaning its impact varies by local grid carbon intensity. However, its emissions impact can be substantial, especially when assessed over a 20–30-year period and in households with high electricity consumption.

One of solar’s distinctive strengths is its ability to hedge against rising electricity prices. US residential electricity prices have increased by more than 26% over the past five years. In areas where utility rates are high and projected to grow, solar locks in long-term savings that other technologies cannot replicate. And while solar may not be the top performer on either lens in most states today, its value multiplies significantly when paired with EVs and ASHPs. Solar generation offsets the additional electricity demand from electrification, lowering operating costs and strengthening consumers’ cost predictability and overall savings case for the bundle. For example, in the Northeast, adding rooftop solar to EV adoption increases average annual savings by $1,420 compared with EVs alone,based on total-cost-of-ownership estimates that include up-front investment costs. Similarly, pairing rooftop solar with ASHPs delivers an additional $960 in annual savings relative to switching to ASHPs alone from delivered fuels.

Four takeaways for residential energy program designers

The expiration of federal incentives does not eliminate the opportunity for residential decarbonization — it changes the conditions under which it must succeed. State and local programs that are thoughtful about where they invest will still be able to reduce GHG emissions and deliver real savings for households. The analysis in this piece points to four practical principles:

• Recognize that clean technologies can still deliver meaningful cost savings, even without federal tax credits. The expiration of IRA incentives raised up-front costs, but did not eliminate the long-term savings case. EVs reduce total cost of ownership by more than $5,000 over 10 years in 18 states; ASHPs generate up to $1,100 in average annual savings for homes on delivered fuels; and solar can lock in long-term protection against rising electricity rates.
• Take both lenses into account when identifying which residential clean technologies to prioritize. Reducing GHG emissions remains essential, and in today’s environment of rising energy costs and affordability concerns, the household cost impact of clean technology choices is increasingly important. The option that reduces the most emissions in a given region is not always the same one that saves residents the most money. Programs that weigh both outcomes will meet their local context and goals, and stretch limited dollars further.
• Match the technology to the household. The economics of each technology vary significantly depending on household energy patterns and local context. High-mileage drivers usually get the most cost and emissions benefits out of EVs. And high-electricity-cost markets are where solar pencils out best. Electric resistance and delivered fuel customers tend to offer the strongest combined environmental and affordability returns for heat pump programs. Understanding regional variations and targeting specific household archetypes, rather than running broad-based programs, is how programs get the most out of every dollar.
• Bundle upgrades for greater savings. The interaction between EVs, heat pumps, and solar can produce savings that no single technology achieves alone. Solar offsets the additional electricity demand from electrification. Furthermore, weatherization, such as insulation, air sealing, and similar upgrades, reduces baseline heating and cooling demand, making ASHPs more efficient and avoiding oversizing. Programs that deliver multiple upgrades together will often outperform siloed approaches.

The post-IRA landscape rewards precision. The programs that will move the needle are the ones that know which technology makes the most sense, which household they are trying to reach, and how to make the economics work without a federal subsidy to fill the gap. The tools are there. The savings potential is real. State and local governments that act now, with targeted and data-driven program designs, have a genuine opportunity to accelerate the clean energy transition on their own terms, and deliver lower energy bills to households.