Solar, the Investment Tax Credit, and the Inflation Reduction Act of 2022
Updated: Jul 16
30% Tax Credit For New Solar Installations
With rising electricity and home energy costs, there hasn’t been a better opportunity to go solar.
The initial investment in solar energy may have deterred you from seriously considering solar for your home in the past, however now there is a significant opportunity to reduce the cost with a sizable tax deduction called the Investment Tax Credit (ITC). This credit will make solar more affordable and accessible for homeowners. The recently passed Inflation Reduction Act has increased the incentive for new solar projects and will boost the renewable energy industry, in general.
All new solar projects installed for the next ten years, from January 2022 until 2032, are eligible for a 30% tax credit. This means that when you complete taxes and owe money to the federal government, you can utilize 30% of your total solar project cost as a credit against what you owe. If you aren’t able to use all of that in one year, this amount will roll over year-to-year.
The available tax credit for homeowners is set to decrease to 26% in 2033, 22% in 2034, and 0% by 2035. Commercial solar installations will also be eligible for the 30% tax credit until 2033 and then the Investment Tax Credit will steadily decrease in the following years: 22.5% in 2034, 15% in 2035, and 0% by 2036. The tax credit also applies to home battery storage systems, even if they are not connected to your panels.
How to claim your tax credit
When you go to do your taxes, quite simply, you will fill out Form 5695 to claim your tax credit. Be sure to speak with your CPA or tax professional about how solar energy will benefit you.
Why go with New Farm Solar?
With the passing of the Inflation Reduction Act, we will likely see a jump in new solar installations in the coming years. New Farm Solar is a small, homegrown company that carefully designs each solar array to optimally serve the customer. We genuinely care about each customer. Therefore, we don’t pump out cookie-cutter designs, which is becoming normal practice with new solar companies popping up and expanding rapidly.
Patrick Villines founded New Farm Solar with a passion for bringing people a solid, better alternative energy source. This passion remains intact, and our small team of trusted and knowledgeable individuals is ready to answer your questions and help you get the right solar setup for your site. Something unique about New Farm Solar is that we do not have a sales team that works off of commission; our team of experienced technicians will get you the best price and service around. You can request a custom quote on our home page or give us a call at 1-833-NEW-FARM (1-833-639-3276).