If you’ve been following the news over the past few months, you’ve probably heard about the Inflation Reduction Act (IRA). The IRA covers a lot of ground, from tax law and healthcare to clean energy and climate change. But the aspect of the IRA that we’re most interested in is the expansion of the solar Investment Tax Credit (ITC). The ITC, also known as the federal solar tax credit, makes solar panel installation significantly more affordable for homeowners and businesses.
Keep reading to learn more about the Inflation Reduction Act and solar panels and find out how you can get tax breaks when you go solar.
Federal Solar Tax Credit Increased to 30%
The federal solar tax credit has been a driver of home and commercial solar installation for many years. It was originally instituted as a 30% credit but was reduced to 26% in 2022. The credit was set to be reduced again to just 22% in 2023 and eliminated for residential solar
Thanks to the Inflation Reduction Act, though, the solar tax credit has been brought back up to its original 30% value, allowing you to reduce the amount you owe in federal taxes by 30% of your solar panel and battery installation costs. So, if you spend $20,000 on a solar energy system, for example, you’ll get a $6,000 tax break.
30% Federal Solar Tax Credit Extended Through 2032
Before the IRA was signed into law, the federal solar tax credit was on its way out. It was set to expire for residential solar in 2024 and be reduced to a 10% credit for commercial solar from 2024 on. Now, the full 30% credit will be in effect for both residential and commercial solar installations until 2032. After that, it will be reduced twice before expiring for residential solar. The new federal solar tax credit schedule is:
The 30% Solar Tax Credit Applies to 2022 Solar Installations
If you installed a solar energy system in 2022 and were planning to claim the 26% federal solar tax credit, you’re in luck. The new 30% federal tax credit is retroactive to the start of 2022, so you can claim the higher credit instead.
Solar Battery Storage Qualifies for the Federal Solar Tax Credit
The 30% federal solar tax credit applies to battery storage, whether it’s attached to a solar energy system or installed as a standalone energy storage device. If you already have solar panels installed at your home or business and want to add battery storage, you can claim the credit for your battery installation.
Tax Credits & Incentives for San Antonio Solar Installation
If you’ve been thinking about installing solar panels at your San Antonio home or business, now is the time! Texas Engineered Solar can help you take advantage of the federal solar tax credit and other local solar incentives so you can get the best deal possible. We are a 100% local, certified veteran-owned solar installer near you serving the entire San Antonio area. We’re proud to help our fellow Texans save money on high electricity costs and can help you decide whether solar makes sense for your home or business.