On Aug. 7, 2022, the Senate passed the Inflation Reduction Act, a comprehensive tax, healthcare, and energy bill that has hugely beneficial implications for homeowners thinking of going solar. This bill has a plethora of financial incentives for homeowners seeking renewable energy solutions like solar panels, battery storage, geothermal, and more.
The bill is the largest investment the United States has ever made in the fight against climate change. By investing in clean energy industries, this act is predicted to reduce the country’s emissions by around 40 percent by 2030 compared to emission rates seen in 2005. “This bill will kick-start the era of affordable clean energy in America,” Majority Leader Chuck Schumer stated, “It is a game-changer. It is a turning point. And it has been a long time in coming.”
What Does This Mean For The Solar Industry?
The promise of return on investment has always accompanied the environmental benefits of rooftop solar. And the Solar Investment Tax Credit has helped offset initial costs. However, this federal tax credit was predicted to drop from 26% in 2022 to 22% in 2023, and was set to expire in 2024.
Fortunately, the Inflation Reduction Act extended the solar ITC by ten years and increased the tax credit to 30% for solar and battery storage projects, amid other clean energy projects. This increase and extension is an effort to promote energy alternatives like solar in order to reduce the country’s carbon emissions.
Residential clean energy investments you make in the next decade will benefit from a number of large tax rebates. The new tax rebates will even work retroactively for investments made in 2022.
A Breakdown Of Tax Incentives:
- 30% tax break on solar products such as solar heating and electricity generation – with no expense limit – through the Residential Clean Energy Credit
- 30% for battery storage installation to help you store the energy your home generates from solar
- 30% for the installation of a geothermal heat system
- 30% for the installation of a smart electric panel
- Up to $8,000, with the average customer receiving a $4,000 rebate, for the purchase of a heat pump – 5x more energy efficient than a traditional A/C, and doubling as a heater
- Up to $4,000 for the purchase of used electric vehicles and up to $7,500 for new electric vehicles purchased in 2023
- Up to $840 for the purchase of a new electric cooking appliance – for an easy transition from a gas stove to an electric stove
How does the Federal Solar Tax Credit work?
New solar electric systems qualify for a 30% tax credit. This credit is applied when you file your annual taxes. That means you can purchase your solar panel system, often with the help of a loan, and earn a 30% tax credit to claim on your next tax return.
What does this mean for you?
As the price of natural gas and other fossil fuels continues to rise, residents face high utility bills. The national average electricity rate typically rises 4-5 percent every year, but rose 8 percent between January 2021 and January 2022. And Massachusetts ranks as the third most expensive state in the country for residential electricity.
Now is the time to go solar and cut your electric bill. Amid rising costs of traditional energy sources, the increased and extended tax credits resulting from the Inflation Reduction Act make solar energy a more affordable option than it used to be. Tax credits on solar products and other energy-efficiency projects are available now, and other electrification incentives will be available starting in January 2023. All incentives will continue through 2034.
Get Solar Panels and/or Battery Storage
Fill out the form below to learn more about the financial incentives of adding solar to your home or business.