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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]
  1. Beginning at 30% and stepping down to 26% in 2033 and down to 22% in 2034
  2. Since this tax credit decreases over the years, it is better to go solar sooner rather than later
  3. This credit applies to residential and commercial solar systems
  4. This tax credit applies to anyone who installed solar technology in 2022
  5. 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/

How To Apply For Federal Tax Credit

There has never been a better time to switch to solar!

Due to federal and state incentives, qualified homeowners can lower their monthly electric bills with solar energy for no money out-of-pocket. Your tax credit may qualify for up to 26% of the cost of your solar equipment when you install solar panels or solar water heating system. This opportunity is only available through the end of 2022 – after that, the percentage will decrease periodically through the end of 2023.

How Solar Tax Credits Work

A solar tax credit is the amount of money that taxpayers can subtract from the taxes they owe to the government from the previous year. If you made a solar investment that was approved by the government during that last year, you would be able to deduct that amount when you file your taxes with the government. All products that are eligible for tax credits for residential energy efficiency are labeled with an Energy Star certification.

How To Apply For Federal Tax Credit

When you file your taxes, make sure to fill out form 5695. This form can be applied only to residential properties.

Download form 5695
Instructions for Form 5695

How Solar Rebate Works

Solar rebates work differently than tax credits. In fact, rebates can help you can get cash back into your hands sooner! While there are no federal rebates for energy-efficient purchases at this time, many state governments, local governments and utility companies offer cash rebates for the purchase of energy-efficient products. Some manufacturers offer specials and sales that make it easier to power your home with renewable energy.

How to Apply For Solar Rebates

The solar rebates vary from state to state, and the actual offer updates frequently. To find out what discounts available to you, please reach out to one of our representatives at 1-888-666-3699 or complete the inquiry form.

Reasons Why Now is the Time to Go Solar

Solar energy is the wave of the future – not only because of its undeniable environmental benefits, but for its financial ones as well. Federal and state incentives will be decreasing at the end of 2020, making today the best time to invest in solar energy. If you’re looking for a way to save money while eliminating your carbon footprint, then now is the time to go solar!

What is Solar Energy?

Solar power is harnessed energy from the sun that is converted into thermal or electrical energy. It’s the cleanest and most abundant resource in the world because sunlight is natural and replenishable. Fossil fuels, like coal and oil, are finite and harmful to the atmosphere due to their contribution to the greenhouse effect.

Why Should I Go Solar?

It’s environmentally friendly: As previously mentioned, sunlight is the cleanest source of energy due to its natural abundance. Solar energy has virtually no environmental impact and reduces carbon emissions, ultimately improving air pollution. Green energy is also more self-sufficient than fossil fuel, since solar energy is generated nearly everywhere, whereas fossil fuels are mainly imported from other countries.

It’s a good investment: Contrary to popular belief, solar energy can save you money on your electric bill in the long run! Additionally, a study conducted by the Lawrence Berkeley National Laboratory in California concluded that buyers were willing to pay $15,000 extra on homes with solar panels [1]. If you’re worried about your taxes, don’t! Most states do not increase property taxes on homes using solar energy.

You’ll receive tax credit: The federal solar tax credit, also known as the investment tax credit (ITC), allows solar energy owners to deduct 26% of the cost of installing the solar system from their federal taxes. It is one of the most critical incentives for clean energy in the United States implemented by the federal government today. Since solar energy is growing across the country, the long-term stability of this policy has allowed businesses to lower costs gradually.

The federal solar tax applies to both residential and commercial systems – every user that owns their systems, as opposed to renting them, qualifies for this deduction. This credit can be applied to personal income taxes that would otherwise be payed to the federal government.

Why Now?

Residential and commercial solar energy system owners can deduct 30% of the cost of installation for systems that have begun construction through 2019. The ITC then decreases as depicted by the following timetable:

  • 2020 – 26%
  • 2021 – 22%
  • After 2021 – 10% permanently

Taxpayers will receive the most out of their tax credit if they invest in solar energy today! Solar energy is both a smart investment for your long-term financial goals and the best choice for the environment.

If you want to reduce your monthly bills, reduce your annual taxes and help improve the environment then solar energy may be right for you. Visit our website at momentumsolar.com or call 1-888-MOMENTUM for more information.