Impact on Solar Tax Credits
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Residential Solar Tax Credit:
- The residential solar tax credit under Section 25D has been increased to 30% for installations completed after December 31, 2021, and will remain at this rate until December 31, 2032.
- After 2032, the credit phases out: it drops to 26% in 2033, 22% in 2034, and 0% for 2035 and beyond.
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Commercial Solar Tax Credit:
- The IRA overhauled the Section 48 Investment Tax Credit (ITC) for commercial solar, but the changes primarily involve restoring a full credit value similar to residential credits. However, there are distinctions in how these credits are calculated and applied.
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Additional Incentives:
- The IRA provides additional incentives, such as bonuses for qualifying energy projects that meet specific criteria, which can enhance the overall tax savings for solar installations.
Overall Impact
- Increased Affordability: By increasing the solar tax credits, the IRA makes solar energy more affordable for both residential and commercial users, which can accelerate the adoption of solar energy and reduce greenhouse gas emissions.
- Long-term Extension: The extension of these credits until at least 2034 provides long-term stability and encourages long-term investment in solar energy.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/how-does-the-inflation-reduction-act-impact-the-solar-tax-credit/
