Federal Solar Tax Credit Bonuses

Solar Tax Pros Federal Solar Tax Credit written over a solar eclipse

Federal Solar Tax Credit Bonuses

The Inflation Reduction Act (IRA) passed in August of 2022 is the largest climate initiative in history. The IRS has created powerful energy savings programs for those who go solar and has created larger tax credits to incentivize investments in solar energy.

Solar Tax Pros is an expert in Federal Solar Tax Credits and Solar Tax Deductions provided through the IRS and helps homeowners and solar investors maximize and collect solar refunds from the IRS.

How It Works

The Solar Tax Credit for 2022 was 26% but the Solar Tax Credit for 2023 is now 30% for the next 10 years due to the IRA. 

The credit works like a rebate for solar panel investment, but the rebate can only be obtained by a taxpayer paying income taxes.

For example, a homeowner purchases a $100,000 solar energy system and receives a 30% solar tax credit for 2024. The homeowner would receive an investment Tax Credit from the IRS for $30,000. If the homeowner is paying taxes to the IRS the amount paid to the IRS will be refunded up to $30,000 in the first year. Any unused tax credit will remain on the books for up to 22 years until used.

If a homeowner only pays $5,000 in income taxes, then they would receive $5,000 in 2023 as a refund. This amount could be used to pay the monthly solar loan payment if desired. The remaining $25,000 can be used in later years when more income taxes are paid.

Solar Tax Credit Rebates And Deductions

Federal solar tax credit rebates for solar panels and tax deductions can help cover many of a solar system’s costs.

  • Tax Deductions can be obtained by homeowners investing in solar with the care of a knowledgeable tax team like Solar Tax Pros. These deductions can be valued at 10%-30% of a solar project’s cost.
  • Domestic Solar Equipment can receive an additional federal solar tax credit of 10%. It is unclear what qualifies at the time of this writing, and further IRS guidance is required to utilize this tax credit correctly.
  • Energy Community property owners can also receive an additional federal solar tax credit of 10%.
  • Large Scale Community Solar Projects in lower-income communities can receive a federal solar tax credit of 10% to 20% to incentivize investors. 

For example, a homeowner can receive a 30% tax credit, plus an additional 10% for being in an Energy Community. Then stack another 10% for using Domestic Solar Equipment to total a whopping 50% investment tax credit rebate to cover solar investment costs.

If you would like to learn more about investing in solar to earn a potentially large investment return while simultaneously eliminating income tax liabilities please click here. You can also give our team a call – for homeowners, call us at (302) 829-7767 and solar pros can call us at (330) 623-7876.

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