Big Win for the Solar Industry with Tax Credit Extension

This week, Senate voted to pass an important bill for Americans looking to switch to clean energy alternatives, The Inflation Reduction Act (IRA). This bill includes nearly “$400 billion over ten years in funding for climate and energy-related programs, and an extension and improvement of the U.S. electric car tax credit.”[1]

So, where do you begin with all of this tax credit mumbo-jumbo and how will it benefit you? Let’s get into it! Momentum is here to break it down for you.

If you are already an expert on tax credits and solar power and ready to start capitalizing on the benefits, speak with one of our specialists at 1-888-MOMENTUM or click on the “Free Quote” button above!

The Highlights of the Inflation Reduction Act

The Inflation Reduction Act is a “trimmed-down” version of the Build Back Better proposal that was stalled in the Senate several months ago. Once this new version was brought forward, it was passed swiftly, which was a great victory for climate champions. [2]

While this bill includes significant corporate tax and healthcare benefits that could help with inflation over the next decade, the climate portion of the IRA is most notable. This part of the bill represents $369 billion in spending – money to be used to further clean energy alternatives and climate change solutions. [3]

What Does this Mean for the U.S.?

Recent analyses show that the investments in this bill could put the United States on track to reduce our emissions by between 31-44% by 2030. This is a big deal, considering the last time American emissions were this low was 2005.[4]

What Does it Mean for Green Energy?

The IRA isn’t just for electric vehicles; it covers a wide range of green energy products like solar that can help reduce emissions on a global scale.

Below are some of the green energy products receiving funding:

1. $60 billion for solar panel and wind turbine manufacturing
2. $30 billion in credits for new projects
3. $27 billion for clean tech
4. $20 billion to reduce agricultural emissions
5. $5 billion for forest conservation
6. $4 billion for drought funding in Western states

In addition to this funding, there are several credits for home battery storage, an extension of the rooftop solar credit and, of course, the E.V. tax credit.

The ITC Tax Credit and E.V. Tax Credit: What is the Difference?

Each of these tax credits is different, one is for residential solar panel systems, and the other is for electric vehicles. Let’s take a look at the highlights of each, starting with the ITC Tax Credit (Investment Tax Credit).

The ITC Tax Credit

1. This tax credit has been extended by ten years at 30%[5]

4. Beginning at 30% and stepping down to 26% in 2033 and down to 22% in 2034
5. Since this tax credit decreases over the years, it is better to go solar sooner rather than later
6. This credit applies to residential and commercial solar systems
7. This tax credit applies to anyone who installed solar technology in 2022
8. The 30% also applies to energy storage, whether it is co-located or installed as a standalone system

The EV Tax Credit

1. Also known as the Electric Vehicle Tax Credit
2. This credit was recently renewed for another decade and will start January 2023 and will last until the end of 2032.
3. The tax credit itself is $7,500
4. The previous tax credit had a cap of 200,000 cars per manufacturer, and the new credit removes that cap at the start of 2023
5. The credit can be applied upfront at the point of sale if purchased from a dealer
6. All new vehicles, materials and critical materials will be made in the U.S.
7. Vehicles must have an MSRP of under $55K for cars and $80K for SUVs, trucks and vans, otherwise they don’t count, leaving out several Tesla configurations
8. Buyers can only take advantage of the credit if they make under $150K a year ($300k filing jointly)

How Can Momentum Solar Help You Go Green? 

Now that green energy is back on the forefront for the U.S. government and consumers thanks to the IRA, it’s time to start capitalizing on its benefits.Our team can help you go solar with a click of a button. We proudly design solar panel systems that fits our customers needs perfectly and help put more money back in their pockets.

But wait, there’s more…literally.

Momentum Solar offers battery storage to create the perfect solar energy system. Whether you are looking to keep the lights on when the power is out or save money during peak electricity rates, we’ve got you covered. With the IRA now in place, you can trust Momentum to help transition your home to green energy.

For more information, please call us at 1-888-MOMENTUM or click on the “Free Quote” button at the top of the page!

 

[1] https://electrek.co/2022/08/07/senate-improves-ev-tax-credit-in-largest-climate-bill-ever/

[2] https://electrek.co/2022/08/07/senate-improves-ev-tax-credit-in-largest-climate-bill-ever/

[3] https://electrek.co/2022/08/07/senate-improves-ev-tax-credit-in-largest-climate-bill-ever/

[4] https://electrek.co/2022/08/07/senate-improves-ev-tax-credit-in-largest-climate-bill-ever/

[5] https://pv-magazine-usa.com/2022/07/28/solar-investment-tax-credit-to-be-extended-10-years-at-30/