On Tuesday, August 16, 2022, President Biden officially signed into law the Inflation Reduction Act. According to a summary from Senate Democrats, the plan, which was approved by the Senate earlier this month and the House of Representatives last week, has an estimated cost of $437 billion, of which $369 billion will be used to fund investments in “energy security”. and climate change.”
“The bill I’m about to sign is not just about today, it’s about tomorrow, it’s about bringing progress and prosperity to American families.” -US President Joseph Biden
Solar investment tax credit
A tax credit known as the Solar Investment Tax Credit (ITC), which was first included in the Energy Policy Act of 2005, allows owners of solar-powered homes to deduct a part of the total cost of their solar panels and/or storage batteries from their federal income taxes.
Initially 30%, the credit fell to 26% in 2020. The incentive was due to expire in 2024 and before that it was expected to drop back down to 22% by 2023. The Inflation Reduction Act from 2022, however, contains a 10-year renewal of ITC.
Return to 30%
The investment tax credit can now be sold or transferred to other taxpayers and has been increased from 26% to 30%. The 30% credit is valid for projects installed after January 1, 2022 and is valid until the end of 2032 for commercial and residential projects.
Everyone should familiarize themselves with the use of transferable credits. Transferable credits are more complicated than receiving funds directly from the government, but they are simpler than tax fairness structures.
Until recently, energy storage projects could only benefit from tax credits if they were directly linked to solar projects. Thanks to the Cut Inflation Act, energy storage projects are now eligible for the same 30% tax credit whether they are stand-alone installations or not. Additionally, batteries connected to solar systems will continue to receive credit, even when no longer charged by solar power.
According to the White House, the 30% tax credit for installing rooftop solar panels will reduce expenses for what is usually an expensive process and help Americans save about $9,000 in energy bills on the lifetime of the system.
It’s time to go solar!
If you are considering solar power, now is the time to invest. Take advantage of the renewed Solar Tax Credit at 30% and build your system with DIY solar power. Our experts can help answer your questions about installing your system and how to receive federal tax credits and other incentives in your area. Start your own renewable energy project and start saving today.
For more industry news and updates, be sure to follow DIY Solar Power on Facebook, Twitterand instagram. To start your home solar project, Build your system now.
*Picture by Katie Moum on Unsplash