The Solar Investment Tax Credit (ITC) has been creating jobs and helping the solar industry grow since 2006. It was set to drop to 22 percent at the end of 2022, but will instead see a 30 percent increase for the next 9 years thanks to the August 2022 signing of the Inflation Reduction Act.
Under section 25D of the tax code, the 30 percent credit is available for residential installations and is also redeemable for panels put in during the 2022 tax year. New wage and apprenticeship standards will drop the commercial solar rate to 6 percent with an additional 24 percent on tap after new labor standards are met.
If you installed a solar panel system in 2022, or plan to do so in the next 9 years, you will be able to reduce your income tax for that year by 30 percent of what your solar panel system cost. For example, if you install a $15,000 panel system, you can pay $4,500 less in income tax for that year.
Eligibility for the ITC is quite simple and depends on a few factors.
To claim your tax credit — if you are eligible to receive the ITC — you must file Form 5695 with your taxes for the installation year.
Many facets of your solar panel system — including solar batteries, additional equipment, and labor fees — are covered by the ITC. Additional equipment refers to things like mounting gear, inverters, and wiring while labor fees encompass general installation, site prep, permits, and inspections.
Yes! Another helpful financial feature of the ITC is that remaining credits can carry over to the next tax year. If you owe less on your federal taxes than the amount of your solar reduction percentage, the remainder rolls over to the following year and so on, until you have fully used your solar credits.
The 30 percent rate will run until 2033, so there is plenty of time to take advantage of the incentive. In 2034 it will drop to 26 percent and phase out by 2035. There is, however, potential for another extension, which is likely as this policy has been wildly successful at creating new jobs and expanding the solar industry.
The ITC has been a crucial policy in incentivizing green energy in the United States. This extension serves as an excellent impetus to contact Gurr Brothers Energy and go solar in 2023. The growth of solar will be exponential in the coming years, so everyone should take advantage of this cost-effective credit while they can and become part of the green energy future!
Author: Hunter S.
Give Gurr Brothers Energy a call today and let’s start powering your life with sunshine!
