To be eligible for energy storage tax credits, such as the Residential Clean Energy Credit, the following criteria must be met:
Eligibility Criteria for Battery Storage Tax Credits
- Capacity Requirement: The battery storage system must have a capacity of at least 3 kilowatt-hours.
- New and Unused: The battery storage technology property must be new and previously unused.
- Installation Timing: The system must be installed and placed in service between December 31, 2021, and before January 1, 2033, to qualify for the 30% credit. For installations between December 31, 2032, and January 1, 2034, the credit drops to 26%, and for installations between December 31, 2033, and January 1, 2035, it further drops to 22%.
- Location and Usage: The system must be installed in connection with a dwelling unit located in the United States and used as a residence by the taxpayer. This includes principal residences and second homes but excludes rental properties.
Filing and Claiming the Credit
- Form to Use: Homeowners claim the credit using IRS Form 5695 (Residential Energy Credits). Include labor costs for installation and connection to the home.
- Credit Calculation: The credit is 30% of the total qualified costs for installations from 2022 through 2032, with phase-downs starting in 2033.
Additional Considerations
- Subsidies and Rebates: Any subsidies or rebates received must be subtracted from the qualified costs, as they are considered purchase-price adjustments.
- Nonrefundable Credit: The credit is nonrefundable, meaning it cannot exceed the amount owed in taxes. Excess credits can be carried forward to future tax years.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/what-are-the-eligibility-criteria-for-energy-storage-tax-credits/
