The Solar Power Investment Tax Credit (ITC)
The federal solar power Investment Tax Credit (ITC), allows you to deduct a percent of the cost of installing a solar energy system from your federal taxes. The ITC applies to both residential and commercial systems, and there is no cap on its value. Thanks to the ITC, the average solar homeowner currenlty saves over $5,000 on the cost of going solar.
The Original Investment Tax Credit was Expiring
The Solar Investment Tax Credit (ITC) was originally set to decline over time.
- 2016 – 2019: The tax credit was at 30% of the cost of the system.
- 2020 -2022: The tax credit was reduced to 26%.
- In 2023, the ITC was set to decline to 22% moving to 0% in 2024.
The Inflation Reduction Act has Restored the Tax Credit
The Inflation Reduction Act signed into law in August 2022
- Restores 30% solar and storage tax credit, now referred to as the Residential Clean Energy Credit (RCEC)
- A 30% tax credit can be applied to Solar, Battery Backup systems, Solar and Battery Electrical upgrades, and Electric Main Panel/Service upgrades,.
Every year as the end of the tax year approaches, home and commercial owners rush to purchase solar to take advantage of the tax credit. This often results in high installation volume that could put your current year tax credit at risk.
We recommend you act quickly to avoid the year-end crunch, and be sure to get a commitment from your installer about their ability to complete construction by year end.
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