Phius-Related Incentives in Massachusetts

Phius projects qualify for a wide range of incentives offered by utility providers, local municipalities and the federal government in Massachusetts and beyond. Moreover, the Massachusetts State Energy Code provides an alternative compliance path for projects achieving Phius certification (with one very important exception detailed below). 

With so many incentive opportunities available for Phius projects, we want to provide a rundown of the programs that are available. Find a list below. For more information on Phius-related policies and incentives, visit the Phius Policy Database.

Utility Incentive 

New Construction Incentive

The utility consortium Mass Save has established two separate incentive programs with respect to Phius. 

The first establishes monetary incentive for the design and construction of multifamily dwellings meeting the Phius Standard. 

• The Net Performance Bonus is calculated by determining the final pay for savings  incentives and subtracting the pre-and final certification incentives. 
• Projects that pre-certify but do not achieve certification are eligible for the pre-certification and Net Performance Bonus.
• Projects over 100 units must be pre-approved by the applicable sponsors of Mass Save.  

Visit their website for more information.

Training Incentives

Mass Save provides multiple training videos on Phius as well as rebates for those who get trained and certified to be Phius Certified Raters and Verifiers. Find more information here.

Low Income Housing Tax Credit (LIHTC) Incentive 

The Massachusetts Department of Housing and Community Development includes Phius as part of its Qualified Allocation Plan. LIHTC is an important policy driver in the construction of low-income multifamily housing. The Qualified Allocation Plan establishes the criteria (through a point system) that determines what projects are awarded the Low Income Housing Tax Credit (which can be worth millions of dollars). The QAP provides significant points related to the sustainability of a project including energy efficiency. A project application that intends to receive Phius certification can receive significant points. 

1. Points included for Phius in the Massachusetts Qualified Allocation Plan.

Energy Codes

Massachusetts Stretch Code

For towns and cities in Massachusetts that are currently enforcing the stretch code, there is an alternative compliance path for Phius. For projects pursuing this path:

• Single-family, multifamily or non-residential buildings that achieve Phius certification will be deemed to be in compliance with the energy code. 

Opt-in Net Zero Code

This new stretch code, which was adopted in December 2022 includes one important change from the current stretch code:  

• Group R buildings over 12,000 square feet are required to meet Phius or other passive house requirements. 

Currently (as of March 2023), five Massachusetts jurisdictions have adopted this energy code: Cambridge, Brookline, Somerville, Watertown and Newton. 

Phius Related Incentives in the Inflation Reduction Act

The following are tax credits, tax deductions and rebates found in the Inflation Reduction Act that apply to projects meeting the Phius standard. 

45L Tax Credit

The 45L tax credit applies to single-family homes, duplexes and multifamily buildings that are 3 stories or less that achieve either Energy Star or Zero Energy Ready Homes certification. 

This is relevant to Phius projects because to receive Phius certification, all projects that can receive Energy Star and/or ZERH certification must do so. The legislation also explicitly states that these tax credits can be stacked on top of the Low Income Housing Tax Credit. 

The tax credit are as follows: 

179d Tax Deduction

The 179d tax deduction applies to projects that need to meet the ASHRAE 90.1 standard (non-residential buildings and high-rise residential projects (4 stories and over). The tax deduction is predicated on improving a minimum of 25 percent over the ASHRAE 90.1-2007 standard (recent rule changes will make the baseline standard ASHRAE 90.1-2019). 

Importantly, the Department of Treasury has a list of approved software programs that can be used to calculate the energy savings. Phius certified buildings will typically exceed the 25 percent minimum making them eligible for the tax deduction. 

The tax deduction is as follows: 

25D Clean Energy Credit

This tax credit applies to clean energy sources detailed below (can be claimed for both new and existing construction). From a Phius perspective, most projects (particularly those that look to be certified as Phius Zero) install on-site photovoltaics: 

High Efficiency Electric Home Rebate Program

This program will be a rebate administered by state energy agencies applying to low-income residents. These rebates focus on incentivizing electrification. Phius Zero projects must be fully electrified and for most others, full or partial electrification is necessary to meet the certification requirements. Much like the 45L tax credit, these rebates can be added to projects awarded the Low Income Housing Tax Credit. 

The income eligibility thresholds for households are: 

• Rebates apply to 50% of cost of project for household from 80% to 150% of region’s Annual Median Income
• Rebates apply to 100% of cost of project for household with less than 80% of Annual Median Income

As more states look to achieve their climate goals, an increasing number will turn to similar codes and incentives as the Massachusetts policies outlined above. Browse the Phius Policy Database to find information on existing policies throughout the United States.