by Malene Blaedel, Solar Optimum contributing writer
Earlier this month, President Joe Biden signed The Inflation Reduction Act of 2022 (IRA), a bill that allocates $369 billion to climate investments, including solar. One of the most talked about initiatives of the IRA is the reinstating of the 30% ITC solar tax credit which was originally scheduled to drop to 22% next year. But what exactly does that mean for homeowners who are interested in residential solar panels? Are solar panels worth it? And what other relevant energy provisions does the IRA include for solar homes?
Tax Credits for a Better Solar Panel Investment
The reinstating of the 30% ITC credit for the next ten years means that businesses and homeowners who are buying solar panels or home battery storage can earn a 30% tax credit on their federal taxes. This not only is a great incentive to go solar – but it also makes solar much more affordable for the average American household. An added benefit of the IRA is the fact that the credit is now also available for stand-alone storage solutions.
While the IRA puts emphasis on solar, other renewable energy sources are highlighted as well. Among the financial incentives of the IRA is a $7,500 tax credit for lower-income customers (requires an income of less than $150k for single filers) for Electrical Vehicles (EV) and plug-in hybrids. The tax credit is applicable for EV sedans under $55k while other vehicle types must be under $80k. Pre-owned EVs (two years old and a price of $25k or less) are now also eligible for a tax credit of up to $4,000.
A Focus on Energy Infrastructure, Manufacturing, and Availability
The IRA includes financial incentives such as tax credits for solar component manufacturers based in former coal communities and direct pay for commercial projects for nonprofits. It also offers electrification rebates, which are especially favorable for middle-income and lower-income families. By prioritizing growing the domestic solar infrastructure, solar panels for homes will become more affordable and more viable for most homeowners.
“The energy provisions of the IRA are crucial for the future of solar in America,” said Rainier de Ocampo, EVP of Marketing at Solar Optimum. “The bill is an important step towards growing and expanding the renewable energy market in the US – and to making solar much more attainable for the average family and underserved communities who previously did not have easy access to affordable solar.”
Who Can Benefit From Going Solar?
With the IRA in effect, millions of homeowners across the US will be able to install solar and battery storage with great savings. In addition, the bill puts America back on track to reach President Biden’s climate goals while building a strong clean energy economy. For homeowners and businesses, the financial savings on solar will increase, and for Solar panel companies, there will be more flexibility for them when it comes to determining which tax credits are most suitable for them.