If you have been considering solar and back up power but have been holding off because of the price, I have great news for you! I will break down the new solar tax incentives now available for you to take advantage of this tax year!
Solar Incentives and Tax Credits
Alright, we have some exciting news for you, Congress just passed a bill that will dramatically reduce the cost of going solar for the average home and business owner. For years, the solar industry has been waiting to see what congress would do to help Americans go solar, but there was no hope in sight, until recently.
If you have been watching the Channel, you’ve heard me speak of the 26% federal tax credit for solar installations and add-ons that was due to expire this year. If it expired, the tax credit would be reduced and the cost of solar would be even higher for customers, which would mean that you could lose out on thousands of dollars if you had waited to go solar.
However, last week Congress passed the “Inflation Reduction Act of 2022” which included significant investments in solar energy for both residential and commercial customers. Homeowners who front the cost of energy efficiency improvements, from new doors and windows to more efficient appliances, would be able to claim up to $1,200 a year or 30% of the total cost at tax time.
There are tax incentives for home energy efficiency upgrades, as well, which include:
- Up to $1,750 for a heat pump water heater.
- Up to $8,000 for a heat pump for space heating or cooling.
- Up to $840 for an electric stove, cooktop, range, or oven; or an electric heat pump clothes dryer.
- Up to $4,000 for a breaker box upgrade.
- Up to $1,600 for insulation, air sealing, and ventilation.
- Up to $2,500 for electric wiring. The Act would also create a second rebate program, which would pay households between $2,000 and $8,000 for undertaking holistic upgrades which significantly lower their energy waste, such as new insulation or air sealing.
Solar Investment Tax Credit (ITC)
Restores the solar investment tax credit to 30%, extending it 10-years, with a gradual phase out beginning in 2033. The tax credit would be retroactive to the beginning of 2022.
There are also some additional incentives for purchasing Electric Vehicles. For new EV purchases, you can get up to $7,500 in tax credit But what if you are only interested in buying a used EV? Well, buying a used EV now has a tax credit of up to $4,000.
Now these credits are not available to every single household, nor would every single household benefit from these tax credits. First, there are income thresholds that apply so these credits will vary depending on your household income. Additionally, these credits are not straight refunds or rebates, but they function as tax credits, which depending on your tax profile, you may not directly benefit from.
All Solar Texas is not a tax advisory firm, nor do we give tax advice to customers, so we always encourage our customers to speak with a tax professional before making any investments in solar, EVs or any other item covered in this new bill.
IMPORTANT note on Energy Rates
Lastly, the bill also includes additional taxes on natural gas and oil production. In Texas, natural gas co-generation facilities are our primary source of electric generation. When the cost of natural gas increases because of additional taxation, energy rates will go up even further. So for Texans, going solar will only make more financial sense under the terms of this bill.
Helpful resources and links:
Please let us know if you have any additional questions about back-up power. Thank you and God bless!