A guide to saving with home and business solar tax credits

The price of solar has come down tremendously over the last decade. In 2010, it cost $40,000 to install an average residential solar system. Today, the price is less than half. Costs have dropped as solar panels have become more efficient and less expensive to produce while the market has grown more competitive.

Homeowners, businesses, nonprofits and other organizations have an opportunity to save even more through government incentives offered to encourage widespread solar adoption to mitigate the impacts of climate change and spur the economy. This gives individuals, as well as businesses, nonprofits and other organizations, a chance to further reduce upfront costs. Today’s financial benefits combined with the additional value of a solar and battery system make it an ideal time to implement clean energy. Here’s a look at available federal tax credits and the many benefits of installing an independent energy system from Solar Alternatives.

A brief history of solar tax credits
The U.S. has supported energy infrastructure through the U.S. tax code for decades, starting with the 1978 Energy Act. The energy crisis of the 70s led lawmakers to offer a residential credit to reduce the energy they consumed and invest in alternative sources. In the 90s, the government offered a Production Tax Credit (PTC) for wind, which was extended in the 2000s along with a 25% rebate for renewable energy system costs. The 2006 Investment Tax Credit (ITC) served as an impetus for the incentives we see today by supporting a 30% tax credit for renewable energy systems. The solar market has grown by more than 10,000% due to the ITC.

Though the ITC was set to expire multiple times Congress continued to extend it—though it dropped to 26% in 2020. The Inflation Reduction Act (IRA) of 2022 renewed the original ITC at 30% for systems installed through 2032, after which benefits will step down again. The historic energy and climate policy also provided energy storage and electric vehicle incentives that residential and commercial customers can take advantage of today.

Solar Investment Tax Credit Rates

Source: solarreviews.com

Federal residential solar incentives

Homeowners have a variety of tax credits available to help save on independent energy systems and more.

• Solar: The ITC offers a 30% tax credit for individuals tp install solar systems on residential property. If the homeowner owns the system, they can claim the credit. This helps reduce the upfront system cost.
• Batteries: The 30% ITC also applies to home systems with battery backup. Batteries allow the continued use of solar power when the grid goes down.
• Electric vehicles: The IRA established a credit of up to $7,500 for new, qualified plug-in electric vehicles. A home solar and battery system can supply power to charge an EV as well.
• Energy efficiency improvements: Energy-efficient home improvements made after January 1, 2023 can qualify for a tax credit of up to $3,200. Reducing home energy consumption enables a solar and battery system to cover more of a family’s total energy use.

There may also be state and local incentives for investing in clean energy. It’s best to work with a trusted solar installer and accountant to discover how to optimize benefits.

Federal commercial solar incentives

Businesses, municipalities and other organizations stand to benefit from many of the same incentives offered to homeowners, with the potential for additional savings.

• Solar and batteries: The IRA extended the 30% tax credit for solar and battery systems on commercial properties.
  • The IRA also provides opportunities to save even more through optional “adders.”
    • Domestic content bonus: Gain an additional 10% credit for using U.S. manufactured products.
    • Energy community bonus: Get another 10% credit for installing on brownfields or in areas that have otherwise benefitted from coal, oil or natural gas business.
    • Low-income communities bonus: A 10% bonus is also available for installing solar in low-income communities.
• Electric vehicles: Businesses and tax-exempt organizations that buy a qualified commercial clean vehicle may qualify for a clean vehicle tax credit of up to $40,000. Businesses can also benefit from installing EV chargers on their properties through the National Electric Vehicle Infrastructure Program (NEVI).
• Energy efficiency improvements: Commercial properties can also make energy-efficient home improvements such as updated interior lighting or HVAC upgrades. Just like with homes, reducing energy consumption allows a solar and battery system to cover more of the facility’s energy needs.

State and local incentives are also available to businesses and organizations in some areas. Again, the right solar installer and tax professional can help navigate customers on the most advantageous path.

What are some reasons to install a home or commercial solar and battery system today?

Customers who install an independent energy system before the end of the year not only stand to benefit from claiming credits on 2024 taxes but also from the energy security, comfort and additional value that comes from clean energy ownership.

Enhanced reliability

The U.S. experienced about two times more weather-related outages during the last ten years than the decade before. A lack of refrigeration, heating, air conditioning and power for medical devices can be dangerous or even deadly. Solar panels generate clean energy that batteries can store and deploy even during grid outages while also protecting the integrity of the roof from elements.

Higher home value

Multiple studies have shown that solar panels increase a home’s resale value. Buyers are often attracted to saving on their energy costs. Zillow reports that buyers will pay an average of 4% more for homes with solar.

Lower electricity bills

Generating solar power on a home or business reduces the amount one needs to purchase from the utility company. This directly lowers monthly electric bills and protects against rising energy costs.

Safer power source

Home gas generators have become a popular option for those seeking reliable power during storms. However, gas generators pose dangerous safety risks by emitting carbon monoxide (CO), an odorless, colorless gas that can cause death within minutes. Home solar and battery systems are preferable over traditional gas generators because they eliminate dangerous fire risk and harmful emissions.

Why choose Solar Alternative for your solar installation?

Solar Alternatives is a trusted provider of premium-engineered solar and battery systems for power any home or business in the Gulf Coast. With 16 years of experience, we take pride in being the sole provider of an entirely in-house engineering team that seamlessly integrates solar panels, backup battery and EV charging for reliable, safe and cost-effective systems. Our experts can guide you through available tax incentives to maximize savings and customize an ideal energy solution for your home or business.

Contact Solar Alternatives today to install your system and claim solar benefits for the 2024 tax year.