Residential Incentives for Energy Efficiency and Clean Energy Installations
Keeping current on the latest tax incentives and rebates for energy efficiency and clean energy installations is a time-consuming process.
The following information and links are provided to help residential energy professionals keep their clients informed about what monetary assistance is available.
The Federal Solar Investment Tax Credit (ITC) Details
The Federal Solar ITC was extended at the end of 2020 and is comprised of two versions: Residential and Commercial
The residential solar ITC remains at 26% for projects that begin construction in 2021 and 2022. In August 2022, Congress passed an extension of the ITC, raising it to 30% for the installation of which was between 2022-2032. (Systems installed on or before December 31, 2019 were also eligible for a 30% tax credit.) It will decrease to 26% for systems installed in 2033 and to 22% for systems installed in 2034. The tax credit expires starting in 2035 unless Congress renews it.
There is no maximum amount that can be claimed.
|Residential Solar ITC|
|The system must be placed in service during the tax year and generate electricity for a home located in the United States. The IRS will expect the solar installation to be completely installed during the calendar year.|
|The solar PV system is to be located at your primary or secondary residence in the United States, or for an off-site community solar project.|
|You must own the solar PV system (i.e., you purchased it with cash or through financing but you are neither leasing nor are in an arrangement to purchase electricity generated by a system you do not own).|
|The solar PV system is new or being used for the first time. The credit can only be claimed on the “original installation” of the solar equipment.|
|Accepted expenses for the installation of the solar system include contractor labor costs for onsite preparation and assembly for an original installation, that includes permitting fees, inspection costs, and developer fees.|
|Balance-of-system (BOS) equipment, including wiring, inverters, and mounting equipment.|
Energy Storage (Batteries): Energy storage devices that are charged exclusively by the associated solar PV panels, even if the storage is placed in service in a subsequent tax year to when the solar energy system is installed (However, the energy storage devices are still subject to the same installation date requirements).
Links for More Information:
Homeowners Guide to Federal Tax Credit for Residential Solar PV from Energy.gov
25 States Offering Sales Tax Exemptions for Solar Energy by the Solar Energy Industries Association (SEIA)
Here is the link for the entirety of the Solar ITC and related bills in the "Consolidated Appropriations Act, 2021" issued by the 116th Congress on Friday, January 3rd, 2020: https://www.congress.gov/116/bills/hr133/BILLS-116hr133enr.pdf
45L Energy Efficient Home Credit
The Energy Efficient Home Credit, as established by the Energy Policy Act of 2005 and codified under §45L of the Internal Revenue Code, allows eligible developers to claim a tax credit for each newly constructed or substantially reconstructed qualifying residence. Examples of housing for which this credit applies includes:
- Single Family Homes,
- Assisted Living Homes, and
- Student Housing
Information about the 45L Efficient Home Credit can be found HERE