It’s passed! The Inflation Reduction Act (IRA) which (among other things) promotes the use of sustainable energy in a number of ways will benefit solar customers through increased tax credits.
For residential installations and others that are less than 1 MW, the ITC will be increased to 30% for 10 years. And very importantly, it is retroactive to January 1, 2022, so those who installed solar this year will reap the same tax benefit. For large projects of over 1 MW, the ITC is more complicated that starts at 6% but can get to 30% by meeting the apprenticeship and prevailing wage requirements. It then awards bonus credits for usage of domestic products, locations, and installations in low-income areas that can even result in up to 70% tax credit.
There is also a major change that affects non-profits and state and local government entities as it will have a direct pay feature where they can receive the tax benefit even though they have no tax obligations. They will receive a tax refund in the form of a payment.
An additional change applies to batteries. A solar battery will qualify for the 30% tax credit no matter when it’s installed. So, homeowners and businesses can add battery storage to an existing solar system. This help is a benefit to consumers, and it helps to stabilize the grid.
Another area that is affected by the IRA is the purchasing of electric vehicles (EV). The up-to $7,500 tax credit is back — but the vehicle’s production location and the battery components sources will affect the actual tax credit. The vehicle price and the owner’s income determine eligibility as well. There are still a number of things to sort out. Something new for EVs is a tax credit of up-to $4,000 for the purchase of a used EV that is priced under $25,000. The good news is that the credits are also until 2032, so a lot can change to make Evs more affordable and give access to more consumers.
Let us help answer all of your questions and get you started on your solar journey.