The Inflation Reduction Act offers to those who choose to invest in solar energy systems a Tax Credit of 30%. The incentive will be available until 2032, and applies to any homeowners in the United States that own their solar system and have taxable income.
Solar Investment Tax Credit (Solar ITC): The Solar ITC is a major provision of the act that allows individuals and businesses to claim a substantial tax credit for a portion of the cost of installing a solar energy system. As of the act’s latest iteration, taxpayers can claim a credit of up to 30% of the qualified expenditures for residential solar projects.
Year-End Deadline for Tax Returns: In order to claim the tax credits in a particular year, The Inflation Reduction Act states that the solar system must be installed and operational before the end of that year. This is why August and early September are some of the most popular times to begin the solar installation process, as the completion of the installation should come right in time for year-end.
Solar Battery Storage Tax Credit Qualification: Solar energy storage systems of 3 kWh or greater qualify according the Inflation Reduction Act. You have the option to apply for the tax credit for a solar energy system combined with battery storage, a retrofit of a solar battery, and independent solar battery storage configurations.
What portion of the solar energy system applies?: The solar tax credit applies to various components of a solar energy system, including solar panels, inverters, mounting equipment, wiring, and other necessary hardware used in the installation of the system. It also extends to battery storage systems when combined with solar installations. However, routine maintenance or repairs are generally not eligible for the tax credit. As this may change, it is advisable to consult with your tax professional to determine your total credit qualifications.
