Understanding the Solar Tax Credit

Sabrina Lopez
August 30, 2022
2 min read

[Originally published on August 30, 2022, | Updated on January 24, 2024 - 4 min read]

Understanding the Solar Tax Credit

The Solar Industry's New Dawn: Unpacking the Inflation Reduction Act

On August 16, 2022, a landmark moment in environmental policy unfolded as President Biden signed the Inflation Reduction Act. This pivotal legislation, aimed at aggressively combating climate change, reinstates and extends the 30% solar tax credit, propelling the United States halfway towards its pollution reduction goals by 2030.

For those contemplating solar energy adoption or adding energy storage, this act alters the financial landscape significantly. Originally set to diminish by 2024, the tax credit now maintains a robust 30% return rate and extends its lifespan for a decade. Let's dive into the finer details of this legislative milestone and what it means for prospective solar adopters.

30% Federal Solar Tax Credit: A Renewed Opportunity

The trajectory of the solar tax credit has seen several shifts over the years. It hovered at 30% until 2019 before dropping to 26% in 2020 and was scheduled for a further decrease. The Inflation Reduction Act overhauls this schedule, reinstating the 30% credit for installations between 2022 and 2032 before a gradual phase-out by 2035. This updated rate retroactively applies to systems installed from January 2022 onwards​. Read this complete guide on our partner's site.

Expanding Scope: Tax Credits for Stand-Alone Energy Storage

In an unprecedented move, the Act enables homeowners to claim tax credits for batteries with a minimum 5 kWh capacity, regardless of their energy source, starting from January 1, 2023. This shift allows for broader applicability and fosters greater integration of renewable energy solutions into the household energy mix​.

Rebates for High-Efficiency Home Upgrades

Beyond solar and storage, the Act introduces rebates for enhancing home appliances. This initiative, primarily benefiting lower-income households, includes significant rebates for heat pumps, electric stoves, and upgrades to electrical panels, among others, available through September 2031​.

A Sustainable Future at the Forefront

The Inflation Reduction Act represents more than just a financial incentive; it's a significant stride towards a cleaner, more sustainable future. It aligns economic growth with environmental responsibility, especially in disadvantaged communities, reflecting a new wave of investment in clean energy and manufacturing​.

Act Now: Capitalize on the Solar Tax Credit

The reinstatement and extension of the 30% solar tax credit present a golden opportunity for homeowners. This incentive and the act's other provisions make the switch to solar more appealing and financially viable than ever. For a detailed understanding and to navigate the specifics of your solar project, consider consulting with a tax expert and a reputable solar integrator.

To delve deeper into the world of solar energy and its benefits, explore our comprehensive guide, "Are Solar & Batteries Right For You?" Whether you're ready for a quote or still researching, we support your journey towards a cleaner energy future.

Note: The information provided in this blog is based on current understanding and is subject to change. For the most accurate and up-to-date information, consult us below!