To qualify for the federal tax credit for battery storage systems in the United States, the following requirements must be met:
Eligibility Criteria
- Capacity Requirement: The battery storage system must have a minimum capacity of 3 kilowatt-hours (kWh).
- Usage: The system must be installed and used in a dwelling unit located in the United States that the taxpayer uses as a residence. Rentals do not qualify.
- New Property: The battery storage technology must be new and previously unused. Used or pre-owned systems do not qualify.
- Installation Period: For a 30% tax credit, the system must be installed after December 31, 2021, and before January 1, 2033. Different percentages apply for installations outside this timeframe.
Claiming the Credit
- Tax Form: To claim the credit, homeowners must file Form 5695 with their tax return for the year when the property was installed.
- Credit Calculation: The Residential Clean Energy Credit is 30% of the qualified expense for systems installed through 2032, then phases down to 26% in 2033 and 22% in 2034.
- Non-Refundable Credit: The credit is non-refundable; it reduces tax liability but does not result in a refund if the credit exceeds the tax owed. However, excess credit can be carried forward to future years.
Additional Considerations
- Expanded Eligibility: The Inflation Reduction Act expanded eligibility for standalone energy storage systems beyond those connected to solar, allowing for a broader range of installations to qualify for tax credits.
For larger or commercial energy storage projects, there may be additional considerations and specific requirements related to the Investment Tax Credit (ITC), which can offer a base rate of 6% with a potential bonus rate of 30% for qualifying projects.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/what-are-the-specific-requirements-to-qualify-for-the-federal-tax-credit-for-energy-storage-systems/
