In August, 2022, President Joe Biden signed into law the Inflation Reduction Act, laying the foundation for future growth of solar energy in the United States. The new law helps transition American homes, businesses, nonprofits, and governments to clean energy generation with several incentives directed toward solar energy.
Most significantly, the Federal Investment Tax Credit is fixed at 30% for 10 years and will not expire until 2034. Locking the tax credit level for a decade will provide stability to the solar energy industry and enable solar companies to make long-term investments in job creation. Because the law was signed in the middle of the year, any homeowner or business who installed solar in 2022 will receive the 30% tax credit instead of the original 26%. The Federal Investment Tax Credit must be used to offset tax liability, but it can be carried forward for one year to offset future tax liability.
The 30% tax credit is extended to battery storage, regardless of the source of the energy. You can install battery storage tied to your solar PV system or tied to your utility grid panel and receive the same credit.
For businesses located in energy communities, the IRA has added 10% on top of the existing 30% FITC. Businesses located in areas meeting certain energy criteria can save a total of 40% off of the cost of their solar project with the FITC. There are three categories of energy communities: brownfield sites, areas with high rates of unemployment, and retired coal mine communities. Find out if your business is located in an energy community.
Farmers and small businesses in rural areas now have greater opportunities to go solar with increased funding to the U.S. Department of Agriculture Rural Energy for America Program (REAP). These grants can cover up to 50% with loan guarantees of up to 75% of the expenses of a solar PV system.
Discover 3 reasons farms & small businesses should consider USDA REAP grants when going solar.
Looking for a new car powered by the sun? The cost of purchasing an electric vehicle (EV) can be lowered with incentives of $7,500 for new cars and $4,000 for old cars. For Illinois residents, EV car owners can receive a $4,000 rebate in addition to the federal tax credit. Business customers of Ameren Missouri can install EV charging stations at their business and receive up to 50% of their costs reduced.
Find out how your business can meet the growing demand by installing EV charging stations for your electric fleet, customers, or employees.
Solar energy has become affordable for nonprofit organizations and governments with the Direct Pay of the Federal Investment Tax Credit. This new feature of the tax credit allows non-tax paying entities to receive the full value of the tax credit by making the 30% refundable. Nonprofit organizations and governments can use that direct payment amount to reduce the cost of their system. Additional incentives for commercial solar PV systems would be applied for properties located in low-income communities or energy communities affected by coal plant closures. In total, these incentives could cut the cost of solar by 60%.
Learn more about incentives for nonprofits and government entities.