With the passing of the Inflation Reduction Act in August 2022, it’s now easier than ever for US homeowners to invest in green energy. This is largely due to the new tax credit on clean energy appliances and infrastructure at home. Here’s how it applies to your home’s solar setup!
First, it’s important to mention that solar isn’t the only aspect that may apply here. Other green appliances including heat pumps, electric vehicles (and their chargers), and home fuel cells can all offer a rebate.
The maximum rebate is 30%, which would apply to most homeowners making purchases from most manufacturers of these products. EVs have exceptions based on their manufacturer, but not the others.
In dollar amounts, that means that if you purchase a $10,000 solar system for your home, you would owe as much as $3,000lesson next year’s tax bill. If you’re self-employed or typically owe back taxes, that could make a world of difference!
Unfortunately, no. This credit applies to limit your taxesowed, so it will not increase the amount of your refund. However, you may still have state-level and local-level benefits that apply to your income taxes, property taxes, or others. Some even include direct rebates!
As it stands, the tax credit is set to lower to 26% starting in 2033 and 22% installed in 2034. The benefits are set to expire in 2035.
Also, many state-level benefits are set to expire before the 2030s. Even worse, states are setting new restrictions on their benefits in light of the new federal credits, so now is the best time to optimize your benefits!
If you’re interested in upgrading your home’s energy system, you have plenty of options. Remember, this credit is forresidential upgrades, so a portable power station or portable solar panels won’t apply.
However, there are still plenty of upgrades you can make without a $20,000 initial investment. For example, a solar heat pump is considered a permanent residential fixture. This way, not only are you using a heating/cooling appliance with 3x the efficiency, but you also offset its energy supply with solar panels.
Conversely, you may choose to invest in a smaller-scale residential solar system, which may save a lot on your upfront investments. The greater your investment, the greater your return, but that doesn’t have to mean breaking the bank.
Also, if you add a home fuel cell, this could offer you the maximal return, even with limited solar panels. It will store your surplus energy and save you money during peak energy usage. In this case, a portable power station and home connection may apply, assuming the solar panels are permanently attached to your home.
Finally, your last option is to purchase a share in a community solar program off-site. This is a renter-friendly option that can save you money on taxes, your electric bill, and your emissions, and you can carry it over to wherever you move in the state!
Now that you know how the solar tax credit works, you can maximize your savings and start your journey toward a net zero home! The sooner we do, the healthier our homes, communities, and planets will be, and the more you will save.
Stay up to date with our latest tips for homeowners, and check out some of our home solar panel options for more information!