Homeowners can save on the cost of solar installation by taking advantage of a 30% Investment Tax Credit (ITC) for solar energy.
Congress recently extended this tax credit, which allows a dollar-for-dollar reduction — equaling 30% of the costs of the system — in your federal income taxes. For example, a solar system that cost $20,000 may qualify for a $6,000 tax credit.
Latest Information About the Solar Investment Tax Credit
In 2022, Congress passed the Inflation Reduction Act (IRA), which offers a major incentive for new solar customers. The bill gives the solar Investment Tax Credit (ITC) a ten-year extension at 30%, making solar power more accessible for households throughout the country.
The IRA marks the largest investment in climate action in US history by allocating approximately $370 billion for greenhouse gas emission reduction efforts over the next ten years and seeks to scale up the production of renewable energy.
The following is a breakdown of the available tax credit over time:
- 30% for residential systems placed in service through 2032
- 26% for residential systems placed in service in 2033
- 22% for residential systems placed in service in 2034
- 0% for residential systems placed in service in 2024 and beyond
- A taxpayer may claim a credit of 30% of qualified expenditures for a system that serves a dwelling unit located in the United States that is owned and used as a residence by the taxpayer. The home served by the system does not have to be the taxpayer’s principal residence.
- Expenditures include labor costs for on-site preparation, assembly or original system installation, and for piping or wiring to interconnect a system to the home.
- If the federal tax credit exceeds tax liability, the excess amount may be carried forward to the succeeding taxable year.
Contact Sandbar Solar to learn more about the Investment Tax Credit for solar energy. And we recommend that you speak with your tax attorney to confirm eligibility for this credit.