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Congress Increases, Extends Solar Tax Credit
There is good news in the solar world coming your way from Congress. Late August, Congress released the Inflation Reduction Act (IRA) which proposes to lower costs for families and combat the climate crisis.
One section of the IRA focuses on the Investment Tax Credit (ITC) which has increased to 30 percent and extended to 2032. Originally phasing out in 2024, it has now been increased over a decade. This news helps prospective solar owners and the community go solar, and save money while doing it.
If you are a homeowner who has installed solar in 2022 or plans to install solar between now and 2032 you can deduct 30 percent of the cost from your federal income taxes. If you owe less than that amount in federal taxes for the year you install your system, you will be able to carry over any unused credit into the next year.
After 2032, the residential ITC will decrease until it phases out. By 2033, it will decrease to 26 percent, 22 percent in 2034 and by 2035 it is projected to officially phase out.
According to the White House, the goal is to power homes, businesses, and communities with cleaner energy by 2030 including installing 950 million solar panels, 120,000 wind turbines, and 2,300 grid-scale battery plants.
By reducing harmful fossil fuel pollution the White House predicts that 3,900 annual premature deaths and 100,000 asthma attacks may be prevented.
Nonprofits, Churches, Schools, and Charities
Prior to this year, churches, schools, charities, and nonprofit organizations couldn’t benefit from the solar tax credit. The IRA made a change this year. Organizations that are tax-exempt will now be able to benefit by utilizing the direct pay option. At this point, there aren’t many details on what this will look like, but by 2023 the option will be available, so keep your eyes open for more information.