The Federal Solar Tax Credit Has Been Extended Through 2032
With the passage of the historic Inflation Reduction Act of 2022, the Investment Tax Credit (ITC) gets a reboot as the Residential Clean Energy Credit, and increases the tax credit to 30% of the cost of installing residential solar heating, solar electricity generation, and storage equipment from an individual’s federal taxes through 2032.
Now, with this new legislation’s updated solar tax credit, installing solar panels and storage batteries is a more attractive and affordable option for many Central Ohio homeowners.
Here are some key details you should know about the Residential Clean Energy Credit:
- If you install solar energy equipment in your home anytime in the year of 2022, through the end of 2032, you’re entitled to a credit on your federal taxes equal to 30% of the cost of eligible expenses.
- There is no upper dollar limit on those expenses.
- The credit can be carried forward to future tax years.
- The credit has also been extended to now cover battery storage technology too.
What Expenses Are Eligible for the Solar Tax Credit?
According to the language in the Residential Clean Energy Credit, and information from the Department of Energy, the same expenses covered under the old law are eligible for this new credit:
- Solar photovoltaic (PV) panels.
- PV cells used to power an attic fan (but not the fan itself).
- Contractor labor for onsite preparation, assembly, or original installation.
- Permitting fees, inspection costs, and developer fees.
- All equipment needed to get the solar system running, including wiring, inverters, and mounting equipment.
- Storage batteries. (You can claim the tax credit for these even if you buy and install them a year or more after you install the solar system.)**
- Sales taxes on eligible expenses.
**In a change from the old law, eligible battery storage units that you install must store at least 3 kilowatts.
Who Can Get the Solar Tax Credit?
It’s available to all taxpayers for their primary or secondary residence located in the U.S. Taxpayers of any income level can take advantage of it. You can use it whether you itemize your taxes or take the standard deduction. Talk to your advisor to learn more about the solar tax credit.
How Long Does the Solar Tax Credit Last?
The 30 percent credit lasts until Dec. 31, 2032. It drops to 26 percent in 2033, then 22 percent in 2034, and then ends in 2035, unless Congress continues it. (The new Residential Clean Energy Credit supersedes an older law, set to expire in 2024, that would have provided a 26 percent credit for solar installations this year, and 22 percent in 2023.)
The Residential Clean Energy Credit will make solar an easy financial decision for many more homeowners in the next decade. Ecohouse Solar welcomes the opportunity to help homeowners in Central Ohio go solar. Ecohouse makes the whole process easy with low-cost financing, and then follows through with great solar design and construction.
Please contact us for a free proposal.