What a great way to wrap up 2022! The solar tax credit, also known as the Solar Investment Tax Credit (ITC) was slated to drop to 22% for residential solar projects installed in 2023. Provisions to increase the solar ITC to 30% until the end of 2032 were rolled into the Inflation Reduction Act signed into law by President Biden on Tuesday, August 16, 2022. See our Homeowner's Guide to ITC by Energy.gov for a deeper read.
What happens after 2032? The incentive is slated to drop to 26% for solar projects installed during 2033, 22% starting in 2034 and is planned to be phased out entirely starting in 2035.
Let's be real...no one here at Natosi Solar is a tax expert. Solar experts, you bet! Tax experts, not even close. If you have a tax specialist, it's best to check with them to figure out your "tax appetite" when determining how the Solar ITC can benefit you.
1) The ITC is NOT a tax rebate.
2) The ITC is NOT a tax deduction.
3) To realize the Solar ITC you have to have a taxable form of income.
4) If you are unable to use the entire tax credit in one year, it rolls over for as long as the credit is in effect.
5) You must own your system to claim the credit. Leased solar does not qualify for the ITC.
Now, when you talk to your tax professional they will be like "Wow, you've done your research. I am impressed." So there you have it, folks! Something to chew on when considering if going solar between 2023 and 2034 is the right move for you.