We're thrilled to announce that the 26% tax credit lives on! The $900B Covid-19 relief bill has finally been signed, bringing a bit of respite to Americans struggling in the face of the pandemic. It also brings a huge boost to those who know that, even as we grapple with the latest Coronavirus surge, the threat of the climate crisis is looming large and the solar tax credit can help. After working with Amicus and SEIA toward this result for several years, we are so happy that the federal solar Incentive Tax Credit (ITC) has finally been extended.
What this means to solar customers is that instead of dropping to 22% in 2021, the tax credit will now remain at 26% through December 31, 2022. The credit will go down to 22% for 2023, and then disappear in 2024 for residential customers and remain at 10% for commercial customers.
“Essentially it means solar customers will receive 26% back off the full price of their project as long as the system is operational by the end of the year in 2022,” said Ipsun Sales Director Patrick Cavanaugh. “For 2023, they’ll be able to receive 22% back. This is great news for our customers, because it saves them money, and it takes the pressure off a bit. It allows them to take their time and do their due diligence when planning a project.”
The original code for solar systems on residential properties can be found in Title 26 of the US Tax Code, Section 25D; and for commercial properties under Section 48. The extension language can be found in the relief bill on page 4915 for residential, and page 4908 for commercial projects.
What this means for the solar industry as a whole, and to anyone who cares about climate change and social justice, is that we now have the wind in our sails for another couple of years. The extension of the credit will allow us to deploy our technology at a faster rate and bring good jobs to Americans who need employment in these tough times.
The current ITC has been one of the most effective pieces of climate legislation in effect since its inception. It has created hundreds of thousands of jobs and invested billions of dollars into the US economy.
In fact, according to the Solar Energy Industry Association (SEIA), the ITC has helped the solar industry see an average annual growth of 52% since 2006. And in the five-year period between 2014 and 2019, solar employment increased 44%, five times faster than job growth in the overall U.S. economy.
“We’re so happy with this addition to the Covid relief bill, while at the same time feeling the pain of everyday Americans who are suffering, and needing more than $600 to get back on their feet,” said Ipsun CEO Herve Billiet.
“The good news is that the tax credit has been shown to be an extremely effective mechanism for fighting climate change and provides immediate results," he added. "This is critical because we need the solar industry to accelerate even faster if we are going to help with the recovery from the Covid-19 crisis, and longer term, survive the climate crisis. This extension also gives us time to keep working with Congress to further extend the credits and implement other helpful solar policies, especially in light of a new, more climate-friendly administration.”
To find out more about the extended tax credit and how it can help you save on a solar energy project, get in touch with us. We love talking tax credits with you!