Inflation Reduction Act and Solar Energy Savings
At Better Tomorrow Solar we are on a mission to make solar power accessible and affordable for all. Learning about possible incentives can help you make an informed decision on whether going solar is right for you.
The Inflation Reduction Act went into law last August. One of the many things this act accomplishes is the expansion of the Federal tax credit for solar photovoltaics. The credit can be claimed on federal income taxes for a percentage of the cost of a solar PV system.
Here are a few common Q&As on whether you qualify for tax credit:
- Who is eligible? You must own the Solar PV system.
- How much is the credit? The credit is for 30% of the entire cost of the solar system. There is a 10% adders for each of the following: North American made material, project is in a low income zone, the beneficiary of the energy is a low income household, the project is an energy community. A project that meets all these criteria is eligible for a 70% tax credit.
- What’s included: The cost of solar PV panels, contractor labor costs, wiring, inverters, mounting equipment, battery storage, and any other item listed on your solar contract.
- What if I am not the homeowner: You do not necessarily have to be a homeowner to claim the tax credit.
- Can I claim the credit if I install solar on my 2nd home?Yes, you can claim the tax credit
- What if I am not connected to the Grid?You can still claim the tax credit
- Can I get credit if I finance my solar system: Yes, you qualify for the total cost of the solar PV system.
- Can I claim the credit if my new home came with solar:Generally, you can claim a tax credit on the expenses related to the new solar PV system that already came installed on the house for the year in which you moved into the house (assuming the builder did not claim the tax credit). For example, you can ask the builder to make a reasonable allocation for these costs for purposes of calculating your tax credit.
- Can I claim ITC for my commercial building: Yes. Solar systems installed on commercial and residential buildings get the same amount of credit. A business that installs solar can fully depreciate the entire cost of the system in one year.
- I have a home office; can I claim the credit? Yes. When the amount spent on the solar PV system is mostly used for residential rather than business purposes, the residential credit may be claimed in full. However, if less than 80% of the solar PV system cost is a residential expense, only the percentage that is residential spending can be used to calculate the federal solar tax credit for the individual’s tax return; the portion that is a business expense could be eligible for a similar commercial tax credit on the business’s tax return.
Join the growing number of Southern home and business owners who are saving money by switching to clean and renewable solar energy harnessed on their own property. You can pay yourself instead of the utility company.
Disclaimer: Information provided does not constitute professional tax advice or other professional financial guidance and may change based on additional guidance from the Treasury Department.