Solar Incentives and Credits
The Inflation Reduction Act: Tax Benefits for Solar and Energy Storage Systems (ESS)
​
The Inflation Reduction Act (IRA) of 2022 offers significant incentives for individuals and businesses investing in renewable energy, particularly solar power and energy storage systems (ESS). These tax benefits aim to reduce the cost of clean energy adoption and accelerate the transition to a sustainable future.
30% Federal Investment Tax Credit (ITC) for Solar and ESS Under the IRA, homeowners and businesses installing solar panels and energy storage systems can claim a 30% federal investment tax credit (ITC). This credit applies to both standalone ESS and systems paired with solar installations. It reduces the overall cost of the project by offsetting 30% of the eligible expenses against federal taxes owed. This credit is valid for systems installed through 2032, providing long-term support for renewable energy adoption.​​​
We are Solar Experts, not your tax professional! We advise you to do your own research and speak to your tax preparer for tax advice.
What does the IRA mean to me?
Incentives for Standalone Energy Storage Systems
One notable change introduced by the IRA is the inclusion of standalone energy storage systems in the ITC program. Previously, storage solutions needed to be paired with solar installations to qualify. This update means homeowners and businesses can now install battery systems independently and still receive the 30% tax credit, making it more accessible to integrate backup power solutions.
Additional Bonuses for Specific Projects
Certain solar and ESS projects may qualify for additional bonuses under the IRA. For example, projects in low-income communities or on tribal lands can receive extra incentives. Similarly, facilities that meet domestic content requirements or are located in energy communities affected by fossil fuel transitions may qualify for increased tax credits.
Transferability of Tax Credits
The IRA also introduces a provision for the transferability of tax credits. This allows eligible parties to sell unused tax credits, providing flexibility for entities that may not have sufficient tax liability to fully utilize the ITC. This feature ensures that the financial benefits of the IRA are widely accessible.
Support for Residential and Commercial Systems
Whether you are a homeowner looking to lower your energy bills or a business aiming to meet sustainability goals, the IRA’s tax benefits make investing in solar and ESS more affordable than ever. With the potential for long-term savings and reduced upfront costs, now is the perfect time to embrace clean energy solutions.
​
These provisions under the Inflation Reduction Act represent a pivotal step toward a greener future, making renewable energy more attainable for all.