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More Money In Your Pocket; Congress Extends The Solar Investment Tax Credit (ITC) at 26% Until End of 2022

More Money In Your Pocket; Congress Extends The Solar Investment Tax Credit (ITC) at 26% Until End of 2022


What Is The Solar Investment Tax Credit (ITC)?

The solar Investment Tax Credit (ITC) is one of the most important federal policy mechanisms to support the growth of solar energy in the United States. Since the ITC was enacted in 2006, the U.S. solar industry has grown by more than 10,000% - creating hundreds of thousands of jobs and investing billions of dollars in the U.S. economy in the process.

The Solar Investment Tax Credit (ITC) Gets Extended

Extended renewable energy tax credits have been included in a $1.4 trillion federal spending package alongside a $900 billion COVID-19 virus relief spending bill. The solar investment tax credit (ITC), which was scheduled to drop from 26% to 22% in 2021, will stay at 26% for two more years.

This means that solar projects in all market segments — residential, commercial, industrial, utility-scale — that begin construction in 2021 and 2022 will still be able to receive a tax credit at 26%. All markets will drop to a 22% tax credit in 2023, and the residential market will drop to 0% while the commercial and utility markets will sit at a permanent 10% credit beginning in 2024.

"We are heartened to see Congress step up to provide Americans with some relief after our country has been mired in a public health and economic disaster," said Abigail Ross Hopper, president and CEO of SEIA. "This pandemic has taken an immeasurable toll on American families, and our deepest sympathies are with those who have lost loved ones and those who are suffering economically because of the ongoing crisis. Over the next few years, we have an opportunity to build a stronger, more reliable, and more equitable American energy economy, and the action Congress is taking today is a helpful down payment."

An extension of the ITC was among the policy priorities put forward by the Solar Energy Industries Association (SEIA) following last month’s presidential election. Abigail Ross Hopper, CEO of the trade body, said in a statement yesterday: "Over the next few years, we have an opportunity to build a stronger, more reliable and more equitable American energy economy, and the action Congress is taking today is a helpful down payment."

She added that SEIA will work to make ITC benefits available as a direct payment to augment solar energy growth and called for adequate funding to support programmes such as SolarAPP, which expedites solar project permitting. "There is bipartisan consensus on many of these issues, and we look forward to working with the incoming administration and the 117th Congress on future pro-solar policies even as we are grateful to this Congress for their actions today."

The legislation also includes the Better Energy Storage Technology (BEST) Act, which authorises US$1 billion over five years for federal innovation investments in energy storage technology research, development and demonstration. According to the US Energy Storage Association (ESA), the act establishes a new competitive grant programme for states, utilities and companies to deploy storage in a variety of applications.

How Does the Solar Investment Tax Credit Work?

The Investment Tax Credit (ITC) is currently a 26 percent federal tax credit claimed against the tax liability of residential and commercial and utility investors in solar energy property. The residential ITC allows the homeowner to apply the credit to his/her personal income taxes. This credit is used when homeowners purchase solar systems and have them installed on their homes.

A tax credit is a dollar-for-dollar reduction in the income taxes that a person or company would otherwise pay the federal government. The ITC is based on the amount of investment in solar property. Both the residential and commercial ITC are equal to 26 percent of the basis that is invested in eligible solar property which has begun construction through 2021.

What Homeowners Need to Know About the ITC Phasedown

There are two federal tax credits that incentivize solar investments: (1) the Section 48 Investment Tax Credit (ITC) available to businesses who invest in solar energy systems; and (2) the Section 25D residential solar energy credit that may only be claimed by individuals who purchase a solar energy system, typically installed on the roof of their home.

These two federal solar tax credits currently give similar benefits and both will drop from 26% to 22% on January 1st, 2023. Starting in 2024 the residential solar tax credit will cease to exist at 0%!

How Can I Take Advantage of The Solar Investment Tax Credit?

Retail residential electricity rates (the amount you pay per kilowatt-hour, or ¢/kWh) have risen across the nation about 15% over the last 10 years. That is insane!

Electricity is a volatile market with many factors affecting the rate. The general consensus is that, like many recent years, electricity rates are getting higher for end users in 2020 and even higher in 2021.

Solar Wolf Energy has a team that is surpassed by none in the industry. That team has led us to a reputation that is well founded in integrity and honesty. Solar Wolf Energy has a unique ability with our vendor partners to discuss multiple panel choices and different paths to the best solution for you. Would you like controls over your future?  Solar Wolf Energy offers that possibility.

We have the knowledge and experience to custom-tailor a solar system that's just right for your home or business. Above all, we know what it means to do a quality job no matter how many challenges we face. This has given Solar Wolf Energy a leg up on the local competition along with the personal touch that we use to guide you every step of the way when you decide to go solar with us.

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  • #solar investment tax credit
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  • #congress
  • #solar extension
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