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On Tuesday, August 16th, 2022, President Biden officially signed the Inflation Reduction Act into law. According to a summary by Senate Democrats, the plan, which was approved by the Senate earlier this month and the House of Representatives last week, has an estimated cost of $437 billion, $369 billion of which will be used to fund investments in "Energy Security and Climate Change."
"The bill I'm about to sign is not just about today, it's about tomorrow, it’s about delivering progress and prosperity to American families." -U.S. President Joseph Biden
A tax credit known as the Solar Investment tax credit (ITC), which was first included in the Energy Policy Act of 2005, enables owners of solar-powered houses to deduct a portion of the total cost of their home solar panels and/or battery storage from their federal income taxes.
Initially 30%, the credit dropped to 26% in 2020. The incentive was scheduled to expire in 2024 and prior to that it was planned to drop again to 22% by 2023. The Inflation Reduction Act of 2022, however, contains a 10-year renewal of the ITC.
The Investment Tax Credit can now be sold or transferred to other taxpayers and has increased from 26% back to 30%. The 30% credit is valid for projects installed after January 1st, 2022, and is valid through the end of 2032 for both commercial and residential projects.
Everyone ought to become familiar with using transferrable credits. Transferable credits are more complicated than receiving funds from the government directly, though, they are more straightforward than tax equity structures.
Until recently, energy storage projects could only receive tax credits if they were directly connected to solar projects. As a result of the Inflation Reduction Act, energy storage projects are now eligible for the same 30% tax credit regardless of whether they are standalone facilities or not. In addition, batteries connected to solar systems will continue to receive the credit, even when they are no longer being charged by solar power.
According to the White House, the 30% tax credit for solar panel installation on roofs will reduce the expense of what is typically a costly process and help Americans save about $9,000 in energy bills over the life of the system.
If you have been considering Solar, now is the time to invest. Take advantage of the renewed Solar Tax Credit at 30% and build your system with DIY Solar Power. Our experts can help answer questions you may have about installing your system and about how to receive federal tax credits and other incentives in your area. Start your own renewable energy project and start saving today.