Yes, there are several additional incentives and tax credits beyond the basic federal solar tax credit that can boost solar savings:
1. Federal Residential Clean Energy Credit (ITC):
- Provides a 30% tax credit on the costs of new qualified solar energy property installed from 2022 through 2032. This credit gradually phases down to 26% in 2033 and 22% in 2034.
- It is a dollar-for-dollar reduction in your federal tax bill and can be carried forward if you don’t owe enough taxes in the installation year.
- Applies to solar panels, inverters, and battery storage systems.
- No cap on the amount you can claim.
- Not available if you lease your solar system or use a power purchase agreement (PPA).
2. Additional Federal Credits for Certain Projects (from the Inflation Reduction Act):
- Extra 10% tax credit for systems installed in designated energy communities.
- Additional 10% credit if the system uses mostly American-made components.
- An added 10% to 20% credit for solar systems installed in low-income communities.
3. State-Level Incentives and Rebates (Example from Illinois and Florida):
- Some states offer sales tax exemptions on solar equipment costs (e.g., 6% sales tax exemption in Florida).
- State rebate programs such as Florida’s rebate of 25 cents per watt, capped at $2,500.
- Property tax exemptions so solar installations do not increase your home tax basis.
- Programs like Illinois Shines facilitate selling Solar Renewable Energy Credits (SRECs), which provide additional payments that can lower solar system costs by up to 30%.
- Utility rebates for smart inverters and battery storage (e.g., Illinois offers $300/kW inverter rebates and $300/kWh battery rebates).
4. MACRS Depreciation for Businesses:
- Businesses can take advantage of accelerated depreciation schedules (MACRS), potentially reducing solar project costs by up to 15%.
5. Financing Incentives:
- Some credit unions and lenders offer competitive clean energy loans with features like low initial payments and the ability to apply federal tax credits to the loan balance, improving affordability.
Summary Table of Key Incentives
| Incentive Type | Details | Availability |
|---|---|---|
| Federal ITC (Residential Clean Energy Credit) | 30% tax credit on system cost, phases down after 2032, no cap, non-refundable | 2022-2032 full rate; phases down in 2033+ |
| Additional Federal Bonus Credits | +10% for energy communities, +10% for US-made components, +10-20% for low-income areas | Through 2032 per Inflation Reduction Act |
| State Rebates & Tax Exemptions | Sales tax exemptions, rebates per watt, property tax exemptions, SRECs sales | Varies by state, e.g., Florida, Illinois |
| MACRS Depreciation (for businesses) | Accelerated depreciation reducing taxable income from solar investments | Federal and some state programs |
| Financing Incentives | Special clean energy loans with low rates and credit integration | Offered by credit unions and some lenders |
In essence, beyond the primary federal solar tax credit, homeowners and businesses can often combine multiple incentives and rebates from federal, state, and local programs to significantly increase their solar savings, sometimes covering 50-65% or more of the system cost depending on location and eligibility. It is advisable to check specific state and local programs as well as consult a tax professional to maximize these benefits.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/are-there-any-additional-incentives-or-tax-credits-that-can-boost-solar-savings/
