Solar Investment Tax Credit: Things To Know

On Tuesday, August 16, 2022, the Inflation Reduction Act became a law after being signed into effect by President Biden.

This act does a lot of things, but one of them is to make the Federal Tax Credit for Solar Photovoltaics, also called the Investment Tax Credit (ITC).

This credit can be used to offset a portion of the cost of a solar photovoltaic (PV) system on federal income taxes.

Let us look at the most significant changes and what they mean for Americans who install rooftop solar:

The ITC increased in amount and its timeline has been extended. Installers of PV systems between 2022 and 2032 will be eligible for a 30% tax credit.

In 2033 and 2034,that will decrease to 26% and 22%. Your tax credit has increased from 22% to 30% if you've already installed a system in 2022.

The solar+storage equipment expenses included in the ITC have expanded. Energy storage devices with 3 kWh or more are now included. This includes stand-alone storage, but solar is better.

The ITC will cut the cost of putting solar panels on a home's roof by 30%, which is more than $7,500 for a typical system.

By helping Americans install solar, these tax credits will help millions more families save $9,000 on their electricity bills over the life of the system.

For more information on the ITC, including eligibility requirements and how to claim it, see the Homeowner's Guide to the Federal Tax Credit for Solar Photovoltaics.