Residential and commercial solar projects are set to receive a big boost in solar tax credit savings with the US Congress passing the Inflation Reduction Act. The Act increases the solar tax credit to 30% and extends the program until 2034. This 15% increase is a nice incentive for residential solar, but it’s an absolute game changer if you’re in the commercial industry
Before the passing of the Inflation Reduction Act, the Solar Investment Tax Credit was slated to sunset in 2024. The program was set to expire after it was reduced to 26% in 2020 – and had an even steeper decrease planned for 2023. Ultimately, the soon-to-expire tax credit would have dipped down to only 10% for commercial solar and 0% for residential. Here’s a quick run-down of the facts you should know:
• The Inflation Reduction Act was passed by Congress on August 12, 2022.
• The Act increases the tax credit savings for residential and commercial industries.
• The 30% tax credit increase was secured until 2032.
• Bonus tax credits are available for qualifying commercial solar projects that benefit low-income communities, use locally manufactured equipment, and develop sites that were previously used for fossil fuel energy.
• Solar projects that qualify for bonus tax credits can receive a combined federal tax credit of up to 60%.
• The solar tax credit will begin to decline in 2033 and will continue down to 0% until the program expires in 2036.
• This decade extension of the solar tax credit program will provide great savings for solar investment, but it’s important to make the necessary plans to ensure the most return on your investment now, before the incremental decreases go into effect.
If you have been thinking of going solar this is great news. However, keep in mind that California Public Utilities Commission (CPUC) is set to make changes to Net Energy Metering rules (NEM). Right now, your savings is based on incentives you receive from NEM 2.0. The new changes will take effect with NEM 3.0 and it’s expected to be less favorable for businesses. Now is the best time for businesses to go solar. Businesses can take advantage to the 30% federal tax credit, plus they can get grandfathered into the NEM 2.0 savings.
For more information contact us through the website or call 559-438-1074.
