This may be the best time to go solar.
New generous incentives are making clean energy even more affordable.
As of 8/16/22, the Federal government has signed the Inflation Reduction Act of 2022, which includes $370 billion for renewable energy spending. This is great news for homeowners who are looking to improve their energy efficiency and save money on their monthly bills.
A key component of the bill is the federal ITC tax credit, which can be used for solar panels, backup battery storage, EV chargers, and a plethora of other products.
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Tax credits for people who electrify their homes
- A 30% tax credit for installing residential solar panels.
- 30% incentive also applies to backup battery energy storage
- Up to $14,000 for home energy efficiency upgrades
- Up to $8,000 to install a heat pump
- Up to $7,500 for purchasing an electric vehicle.
Great News-It's Retroactive So you Don't have to wait
Another benefit, is you don’t have to wait until 2023 to be eligible. In fact, anyone who has installed solar since the beginning of 2022 will get the 30% incentive retroactively applied to them. This 30% incentive also applies to energy storage whether it is co-located or standalone.
Furthermore, the Inflation Reduction Act provides clarity. Since its inception in 2006, the solar tax credit has repeatedly expired and been revived, often at the last minute. Now the 30% tax credit is not set to expire until 2032.
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Does the Tax Credit Cover Back Up Batteries?
In short yes, the solar tax credit can be applied to back up battery systems. Backup battery systems can allow homeowners to store extra daytime energy and use it later at night when electricity rates are higher and they can help keep the lights in in the event of power outages. Pretty nifty, huh?
Texas Direct Solar has experience with a variety of back up battery systems including Enphase, Kohler, LG, and Generac. So we can help you decide which technology is best for your home.
Does the Tax Credit Cover Back Up EVs?
The answer is yes, but there are caveats–(actually, it’s pretty confusing). There is a possibility of getting the full $7,500 tax credit on new cars and $4,000 on used cars.
The Basics
- Cars will need to be manufactured in North America to be eligible. Here’s a list of current vehicles here.
- As of Jan. 1st, 2023, the 250,000 vehicle sales cap that has been preventing buyers of Tesla, General Motors, and Toyota from taking advantage of the EV tax credit will be lifted. This means that vehicles made by these automakers in the US will once again be eligible for the EV tax credit.
- Starting on January 1, 2023, a new rule will go into effect that limits the amount of EV tax credits people can get based on their income. For a single person, this limit will be $150,000 per year. For couples filing jointly, the limit will be $300,000 per year.
- Manufacturer Suggested Retail Price (MSRP) Limits on which vehicles can qualify. That would be $55,000 for new cars and $80,000 for pickup trucks, SUVs, and vans.
- “From December 31st, 2024 and on, vehicles that get their battery parts from “foreign entities of concern,” such as China won’t qualify for the EV tax credit anymore if they’re put into service after December 31st, 2023. If the battery only contains minerals from these countries, then it will become ineligible for the credit starting December 31st ,2024 too. The bill would require batteries to have at least 40 percent of materials sourced from North America or a US trading partner by 2024 in order to be eligible for the tax break. By 2029, battery components would have to be all made in North America”. Source
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*Please be advised that we are solar folks not accountants so we encourage every one to work with their tax professional to confirm tax credit eligibility.