How Donald Trump’s Elimination of Energy Star Program Could Affect Tax Credits

The Trump administration is poised to eliminate the U.S. Environmental Protection Agency’s (EPA) Energy Star program, a measure that would reverberate through millions of U.S. households and businesses that rely on it for energy efficiency guidance and tax benefits.

The Washington Post reported the cuts on Tuesday, citing sources familiar with the move. Officials in President Donald Trump’s administration announced during a meeting on Monday at the EPA’s Office of Atmospheric Protection that the office would be dissolved and the Energy Star program discontinued.

Energy Star, known for its blue label and yellow EnergyGuide sticker found on appliances and homes, certifies products and buildings that meet certain energy-efficiency standards. Since its inception in 1992, the program has helped consumers save energy and money on utility bills, per the Energy Star website.

Newsweek has contacted the EPA and Energy Star for comment on Tuesday.

What Is the Energy Star Program?

First launched by the EPA, the Energy Star program identifies and promotes energy-efficient products and practices. Goods from refrigerators to air conditioners, as well as entire buildings and homes, can receive the Energy Star label when they meet energy efficiency benchmarks.

According to the Department of Energy, in 2010, Americans saved nearly $18 billion on utility bills by way of the program.

Trump first suggested canceling or privatizing Energy Star in his first term.

How Does Energy Star Work?

First, Energy Star creates guidelines. From there, manufacturers voluntarily submit products for certification to earn the Energy Star label. Products must meet energy performance guidelines established by the EPA, and third-party certification is involved to ensure credibility of the label.

According to Energy Star, thousands of manufacturers and retailers have partnered with the EPA to sell these products.

How Could Energy Star Affect Tax Credits?

Beyond savings on energy bills, the Energy Star program ties directly into federal tax credits, which many homeowners use to offset costs of upgrading to energy-efficient equipment.

As it stands now, through 2032, federal income tax credits are available to homeowners that allow up to $3,200 annually, to lower the cost of energy efficient home upgrades by up to 30 percent, according to Energy Star’s tax credit page.

Through the program, some homeowners can save $2,000 on costs just to upgrade air source heat pumps, heat pump water heaters, and biomass stoves and boilers to eco-friendly options.

Consumers can also claim credits for other Energy Star-certified systems, including insulation, windows and solar energy systems. These credits were expanded under the Inflation Reduction Act 2022.

Paula Glover, president of nonprofit Alliance to Save Energy, told CNN: “Eliminating the Energy Star program would directly contradict this administration’s promise to reduce household energy costs.”

Glover continued: “For just $32 million a year, Energy Star helps American families save over $40 billion in annual energy costs. That’s a return of $350 for every federal dollar invested.”

A portion of the Inflation Reduction Act does reference Energy Star requirements in defining eligible improvements. But it’s unclear how federal tax credits under the act would change if the program gets cut.

If the program is axed, it’s possible that consumers who opted for eco-friendly appliances could be denied tax benefits for which they may have budgeted. If Energy Star is eliminated before the end of the 2025 tax year, homeowners who purchase upgrades in anticipation of tax credits could also face challenges down the line.