Exciting News: Inflation Reduction Act Boosts Solar Benefits

The Inflation Reduction Act (IRA) has passed, bringing positive changes for solar customers. One of the significant highlights is an increase in tax credits, particularly for residential installations and smaller projects.

For installations under 1 MW, the Investment Tax Credit (ITC) is now set at 30% for a decade. Notably, this change is retroactive to January 1, 2022, meaning those who installed solar this year can reap the same tax benefits. Larger projects over 1 MW have a more complex path, starting at 6% but potentially reaching 30% by meeting specific requirements, including apprenticeships and prevailing wages. Bonus credits are also in play for using domestic products, specific locations, and installations in low-income areas, potentially resulting in up to a 70% tax credit.

A pivotal update directly benefits non-profits and state and local government entities with a direct pay feature. This allows them to receive the tax benefit even without tax obligations, receiving a tax refund in the form of payment.

An added boost applies to solar batteries, making them eligible for a 30% tax credit, regardless of installation timing. This means homeowners and businesses can add battery storage to existing solar systems, benefiting consumers while stabilizing the grid.

The IRA also influences the purchase of electric vehicles (EVs). The tax credit of up to $7,500 is making a return, with vehicle production location and battery component sources affecting the actual credit. Eligibility is determined by the vehicle price and the owner’s income. Notably, a new feature offers a tax credit of up to $4,000 for used EVs priced under $25,000. These credits extend until 2032, promising potential changes to make EVs more affordable and accessible.

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