New Solar Tax Credit for 2022
As time goes on, solar energy is becoming more popular and advantageous for homeowners. Technology is getting better, and production costs are decreasing. At the same time, efficiency and performance are increasing, meaning you can collect, store, and utilize more power with solar energy than ever before.
But some homeowners they’re still waiting for more local and federal subsidies to be in place before installing solar on their property.
However, the government is making it more affordable to implement solar energy systems in your home. The Inflation Reduction Act that was passed in August offers better solar tax credits and makes them available for years to come. Here’s what you need to know about the recent changes in solar tax credits during 2022.
Solar Tax Credit – The Inflation Reduction Act
President Joe Biden signed the Inflation Reduction Act on August 16, 2022; included were many production tax credits for clean energy sources like wind and solar.
Before the Inflation Reduction Act was passed, citizens could claim a 26% credit on the initial cost of certain qualified energy systems; this included any that used alternate fuel sources like wind, solar, geothermal, biomass, or fuel cell power. That credit was set to decrease to 23% in 2023 and eventually expire in 2024.
The new bill causes the credit to increase to 30% and last for the duration of 2022 to 2032. After that, it will drop to 26% in 2033, 22% in 2034, and then expire in 2035. There is no dollar limit on the tax credit, so you’ll receive 30% off your solar system whether you spend $10,000 or $100,000. In the next section, we’ll go over what the tax credit covers.
Solar Tax Credit – What Does It Cover?
Any trusted local solar company will tell you that dozens of components make up a solar array installation, so here’s a breakdown of what the tax credit covers:
- Solar photovoltaic panels
- Contractor labor
- Photovoltaic cells that can be used to power an attic fan
- Fees and costs related to the solar system like permits, inspections, and development
- Any equipment needed to make the solar system run, such as mounts, inverters, and wiring
- Solar storage batteries (learn more about the best solar battery backup options)
- Any sales taxes that you paid that are deemed eligible expenses
Solar Tax Credit – Other Changes
The tax credit no longer applies to other alternative energy appliances like water heaters and biomass furnaces. However, it does apply to solar panel battery storage units as long as the battery can store at least 3-kilowatt hours.
There are many more financial benefits to implementing solar panel technology as an energy source in your home. If you’re looking for Houston solar installers, contact us at Sunshine Renewable Solutions. We’re proud to be one of the best solar companies in Texas!
Call us at (832)280-8838 to learn about the recent solar tax credit or to get your free estimate today!