The Inflation Reduction Act (IRA) is an exciting step forward in the fight against climate change! The sweeping legislation includes clean energy provisions that will allow the United States to invest more in clean energy technologies, reduce global emissions, lower energy prices, and bolster our economy—all while building a reliable and affordable clean energy sector.
So, what does all this mean for residential solar panel installation? Keep reading for a breakdown of how the Inflation Reduction Act of 2022 will make solar energy more affordable and accessible to homeowners across the country.
What Is the Inflation Reduction Act?
The Inflation Reduction Act is a new piece of legislation that allocates spending to address climate change, boost energy production, and counter high healthcare costs, and is the largest clean energy investment by the federal government in United States history. The IRA will create over 9 million jobs and help the United States take a giant step toward reaching its clean energy and carbon reduction goals.
The Inflation Reduction Act & Solar Panels
The IRA’s policies aim to move us away from fossil fuels and toward clean energy technologies. A large share of the nearly $370 billion dollars the act allocates to climate action will go towards tax credits and incentives for renewable energy technologies, including solar panels and battery storage.
Here are a few highlights from the bill:
Increases the Solar Investment Tax Credit to 30%
The Inflation Reduction Act brings the solar Investment Tax Credit (ITC) back up to 30 percent. This means that homeowners who install a solar energy system can reduce their federal tax liability by 30% of their total solar installation costs, making home solar significantly more affordable. The legislation also includes a retroactive credit, so anyone who installed solar in 2022 is eligible to receive the new 30% tax credit.
Prior to the Inflation Reduction Act, the solar tax credit in 2022 was worth 26% of your solar installation costs. It was set to be reduced to just 22% in 2023 and eliminated for residential solar projects in 2024.
Extends the Investment Tax Credit for 10 Years
Not only does the Inflation Reduction Act increase the federal solar tax credit, but it also extends it. The IRA includes a 10-year ITC extension for residential solar, commercial solar, and utility-scale solar projects.
Adds a 30% Tax Credit for Standalone Solar Energy Storage
Thanks to the Inflation Reduction Act, residential solar batteries will be eligible for a tax credit even if they are not connected to or charged by solar panels. Before the IRA was passed, solar batteries had to be connected to a solar panel system in order to qualify for the federal solar tax credit.
Take Advantage of the IRA with Home Solar Installation!
The Inflation Reduction Act creates an excellent opportunity for Arizona homeowners to go solar now. With a 30% tax credit available for both solar panels and battery storage, there has never been a better time to go solar.
Energy Solution Providers has been a leading solar provider near you in Arizona for over 20 years, helping to create more affordable, sustainable energy for homeowners in Phoenix, Scottsdale, Carefree, and many other communities. We’re here to answer your questions about solar incentives in Arizona and can help you go solar in a way that makes sense for your home and budget.