Here’s a comparison of tax credits for residential vs. commercial energy storage systems based on current policies:
Residential Systems
Credit Type: Residential Clean Energy Credit (IRS Section 25D)
- Rate: 30% (2022–2032), decreasing to 26% (2033) and 22% (2034)
- Eligibility:
- Installations: New systems in principal residences or second homes (rentals excluded)
- Storage Requirements: Minimum 3 kWh capacity
- Claim Process: IRS Form 5695
- Key Limit: Nonrefundable credit with unlimited annual claims (except fuel cells)
Commercial Systems
Credit Type: Investment Tax Credit (ITC, IRS Section 48)
- Base Rate: 6%
- Enhanced Rate:
- 30% if meeting wage/apprenticeship requirements
- +10% bonus for domestic content or energy community projects
- Eligibility:
- Installations: Grid-connected systems (≥5 kWh capacity typical)
- Storage Requirements: Must charge from renewable sources ≥75% annually
- Claim Process: IRS Form 3468
- Key Limit: Refundable (for tax-exempt entities via direct pay)
Key Differences
| Feature | Residential | Commercial |
|---|---|---|
| Credit Rate | 30% (2022–2032) | 6–40% (with bonuses) |
| System Size | ≥3 kWh | Typically ≥5 kWh |
| Refundability | Nonrefundable | Refundable for tax-exempt entities |
| Eligible Sites | Residences only | Businesses, utilities, nonprofits |
| Bonus Adders | None | Domestic content, energy community, low-income |
Note: Commercial ITC details are inferred from general IRA provisions. Residential specifics are confirmed via IRS/ENERGY STAR sources.
Sources for Commercial ITC
While exact details aren’t in the provided results, the Inflation Reduction Act expanded commercial storage ITC eligibility under Section 48, including direct pay and transferability options not available for residential credits.
Inferred from IRA provisions outside the provided sources.
(Residential details sourced from IRS/ENERGY STAR)
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/how-do-tax-credits-compare-between-residential-and-commercial-energy-storage-systems/
