The Inflation Reduction Act of 2022 (IRA) has been signed into law, which is great news for the solar energy industry. This massive tax, healthcare, and climate law will, among other things, address two of the most important issues Americans are facing today—energy costs and climate change.
To tackle these issues, the Inflation Reduction Act makes solar panel installation more affordable for residential, commercial, and utility-scale projects.
The Inflation Reduction Act & The Solar Tax Credit
The federal solar tax credit, also known as the solar Investment Tax Credit (ITC), is one of the best solar incentives to ever exist in the United States. It has helped make solar panel installation more affordable since it was introduced in 2006 and has been in place ever since thanks to multiple extensions.
Before the IRA was signed into law, the ITC was on a step-down schedule and was set to be eliminated for residential solar projects in 2024. The Inflation Reduction Act, however, has made important changes to the ITC.
Increases the Solar Tax Credit to 30 Percent
Thanks to policies set forth in the IRA, the federal solar tax credit in 2022 is now worth 30% of your total residential or commercial solar installation costs. The 30% credit is retroactive to 2022, so if you installed solar panels in 2022 and were expecting to claim the old 26% credit, you are now eligible for the new 30% ITC.
Extends the 30% ITC for Ten Years
In addition to increasing the federal solar tax credit, the IRA also extends it. The 30% credit will be in effect until 2032. After that, it will be reduced on a step-down schedule and eventually eliminated for home solar installation.
Implements Direct Pay for Nonprofits & Government Entities
Because the ITC is a tax credit, it has historically only been available to entities that pay taxes. The ITC changes that by implementing direct pay for nonprofit organizations and government entities that install solar panels.
The Largest Clean Energy Investment in United States History
The Inflation Reduction Act is the greatest investment the United States has ever made to address climate change. Thanks to the IRA, more than $300 billion dollars will be invested in clean energy and climate reform.
The policies set forth in the IRA aim to move the United States away from fossil fuels and towards renewable energy sources like solar and wind. Most of the funding is allocated to tax credits like the newly revamped ITC that will encourage the widespread adoption of solar panels, solar batteries, heat pumps, energy efficiency improvements, and electric vehicles.
It also incentivizes companies to manufacture clean energy technologies in the United States while taking steps to reduce the manufacturing industry’s carbon footprint.
Take Advantage of the New 30% Federal Solar Tax Credit
If you’ve been thinking about installing solar panels at your North Coast home or business, there’s never been a better time! Six Rivers Solar can help you find an affordable solar solution that works for your budget with zero-down financing and excellent solar incentives like the 30% federal tax credit.
We are the leading local solar company near you in Eureka, California, with decades of experience serving local homeowners and businesses. Whether you want solar for your home, business, or farm, we are the solar provider to trust on the North Coast.