Good news! The Federal Solar Tax Credits are set to increase by 30%, and it’s retroactive, so there’s no need to wait!
The Federal Tax Credits, currently at 26%, were set to reduce to 22% in 2023 and 0% in 2024. But they’re now here to stay, for at least 10 years!
Federal Tax Credits Extended
Solar tax credits were set to expire in 2024, providing no reductions for new solar installations. But this bill calls for a 10-year extension!
That means until 2033, new solar installations can qualify for a 30% reduction on your tax bill. It will decrease to 26% in 2033 and 22% in 2034.
Without this bill, 2024 would have been the final year of solar tax credits.
Read Related: FLORIDA SOLAR TAX CREDITS GUIDE
A Victory for U.S. Solar
This surprise twist comes as a victory for the solar and renewable energy industry, thanks to an agreement reached between Democrats and Senator Joe Manchin in August 2022.
They’ve agreed on a reconciliation bill (‘Inflation Reduction Act of 2022‘) which provides $370 billion in spending on ‘renewable energy and climate measures.’
Jason Walsh, executive director of BlueGreen Alliance, said,
“This legislation demonstrates that we don’t have to choose between good jobs and a clean environment, as some falsely claim. The Inflation Reduction Act supports both. This bill will create good-paying union jobs across the country while driving down the emissions causing climate change. It will be a game-changer in growing clean energy, revitalizing manufacturing, and building resilient communities.”
A Win for the Planet
The Inflation Reduction will also have a big impact on fighting the climate crisis. Estimations suggest that by 2030 it should reduce greenhouse gas emissions in the U.S. to 40% lower than they were in 2005.
President and CEO of the Solar Energy Industries Association said:
“Today is a monumental day for America’s clean energy progress and global climate leadership. With the passage of the Inflation Reduction Act in the Senate, solar and storage companies are one step closer to having the business certainty they need to make the long-term investments that decarbonize the electric grid and create millions of new career opportunities in cities and towns across the country,”
“This legislation is the most transformational investment America has ever made in our climate future, and we are thankful to our members, the clean energy community and every one of our solar champions in Congress for their work to get us to this historic moment.
“The solar industry has set a goal to account for 30% of all U.S. electricity generation by 2030, and this legislation will be a catalyst for reaching that target. Now the work can begin to build out America’s clean energy economy with historic deployment, domestic manufacturing, investments in low-income communities, energy storage, smoother interconnection and so much more.”
30% Reduction is Retroactive for 2022 Installations!
Any eligible system installed in 2022 will also retroactively qualify for the 30% reduction. So you don’t need to wait until 2023!
To qualify for Federal Tax Credits in Florida, you must meet these criteria:
- To qualify for the retroactive 30% tax credit, you must have your solar panel system installed in 2022.
- The solar power system must be used by someone paying U.S. income taxes.
- Your solar panel system must be at your primary or secondary residence.
- You must own the solar PV system.
- The solar power system must be new, or be in service for the first time.
- All electrical and fire code requirements must be met.
What Are Solar Federal Tax Credits?
- Tax credits are a reduction on your income tax bill.
- For example, $10,000 Federal Tax Credits = A $10,000 on your income tax bill.
- A percentage of your solar system’s installation costs can be claimed on your federal income taxes.
- There is no maximum amount that you can claim.
- It can be rolled over to the next year.
How Much Could You Save with Solar Tax Credits?
Solar panel and solar system installations can benefit from the following savings:
|Year||Tax Credit Percentage||Savings on $30,000 Installation (For Example)|
|Installed during 2022||30%||$9,000|
|Installed from 2023-2032||30%||$9,000|
Solar tax credits can apply to upfront costs and delayed costs, including:
- Solar Power Installation Fees
- Solar Equipment
- Solar PV and Solar cells
- Permitting Service Costs
- Permit Fees
- Shipping Costs
- Engineer Fees
- Electrician Fees
- Solar batteries, powered by solar panels
- Energy storage systems, powered by solar panels.
As a side note, federal tax incentives will also be available at their own rates for:
- Electric vehicles
- Wind energy
- Home Efficiency Projects
- And more
Don’t Delay! Inflation and Supply Chain Issues Persist
Sadly, solar supply chain issues in 2022 are still looming.
The solar industry worldwide is still struggling due to a shortage of raw materials, solar panels and labor.
Florida Power Services has planned well in advance to ensure every existing installation plan is completed on time. We will not let our customers down. However, new customers are advised to get started now rather than suffer delays and price hikes later in the year.
Increased prices are likely for those who do not get locked into the current pricing.
Why Are There Supply Chain Issues?
The solar industry has been struggling to keep up with demand since the start of COVID-19. Since 2020, supply prices have risen by as much as 40%.
- Polysilicon component shortages triggered by U.S. bans on forced labor Chinese suppliers.
- COVID-19 disruptions and shutdowns of manufacturing facilities in China, Vietnam and Southeast Asia.
- Buyer demand increased due to the climate crisis concern.
- Rising utility and energy prices are resulting in new solar installations.
- Global Shipping constraints triggering delays, cost increases and cancellations for solar panel shipments to the US.
- Shortages of raw materials, including glass, aluminum, polysilicon, copper and silver.
Start Your Florida Solar Installation Today
Florida Power Services ‘The Solar Power Company’ welcomes you to contact us today to inquire how you can install a solar system built for the future!
As one of Florida’s leading, resident-run solar companies, we’d love to help you take advantage of the 30% solar tax credits before supply chain issues cause price increases.