When the Inflation Reduction Act was passed in 2022, it included many incentives aimed at making clean energy more accessible and affordable. With $370 billion set aside specifically for tax credits and other initiatives aimed at improving the environment, the IRA helps homeowners and businesses save on electrification upgrades, energy efficiency upgrades, AND clean energy upgrades.
Many of these incentives come in the form of tax credits. And if that term made you shudder a little -never fear! Today, we’re covering the basics of all things tax credits: what they are, how they work, and how to take advantage of them to save on solar installation in 2023 and beyond.
Tax Credits 101: What Are They and How Do They Work?
Put simply, a tax credit is an incentive that reduces the amount of income tax you owe to the government, dollar-for-dollar. For example, if you owe $1,000 in income tax and receive a $400 tax credit, you end up owing only $600 in income tax.
There are a wide array of tax credits available to taxpayers, ranging from incentives for environmentally-friendly home upgrades, to savings on education costs, to credits to help offset the costs of child and dependent care. Today, we’re focusing on the federal solar tax credit, which makes solar installations more affordable for home and business owners.
How Does the Federal Solar Tax Credit Work?
Now that we’ve covered the basics of tax credits, let’s dig into the nitty-gritty of the federal solar tax credit, aka the solar Investment Tax Credit (ITC). Both residential solar and commercial solar installations are eligible for this tax credit. And, as part of the 2022 Inflation Reduction Act, the ITC was increased to 30 percent of your total solar installation costs.
Make the Most of Solar Tax Credits and Incentives with My Generation Energy
With incentives like the federal solar tax credit available in 2023, it’s a great time for home or business owners looking to install solar. Not to mention-Massachusetts and Rhode Island offer additional solar incentives and financing to make these installations even more affordable.
Want to learn more about your home or business’s solar potential? The regional experts at My Generation Energy are here to help. We support home and business owners across Cape Cod, Greater Boston, South Shore, South Coast, and Rhode Island with their solar projects, from start to finish. Contact us today for a free solar quote, and we’ll help you determine how much you could benefit from installing solar panels.