ITC Update! What Could Change? How Will You Benefit?
Alex "Solar Girl" Steele
If you’ve been tuned into the solar scene for a while, you probably already know about the Investment Tax Credit - a federal incentive program to encourage folks to go solar by giving them an opportunity to write off a large portion of the cost on their taxes. This program started in 2005, and has been modified over the years to continue encouraging anyone who is able to switch to renewables. Originally, anyone who installed solar could write off 30% of the cost of the project on their taxes, and the plan was set to gradually decrease the write-off percentage over the years. However, the program was so successful that it’s been extended and renewed many times!
The first draft of the economic plan which included the ITC, known as the Energy Policy Act of 2005, was designed to end in 2007, but it was extended to 2008. Over time, it was extended again and again, and in 2021 it’s still going strong! Right now, solar customers can still benefit from a 26% credit. President Biden has proposed a more aggressive extension of the ITC in his new infrastructure recovery plan, called The American Jobs Plan, that would extend the 26% incentive for the next 10 years!
The American Jobs Plan is one facet of a 3-part Build Back Better agenda, which aims to repair our economy, our labor force, and our communities through economic incentives and new taxes for corporations and the mega-wealthy. President Biden hopes to inject the revenue gained from raising taxes on a small population of high earners into our energy infrastructure, to develop at least 20 GW of new high-voltage power lines, employ millions of Americans, and utilize American-made products. He also hopes to use these funds to extend and augment the solar ITC. If this plan goes into effect, it will provide not only investment tax credits to renewable energy developers, but it will also reward renewable production with a direct-pay production tax credit! Long-term, residual incentives for clean energy production have been successful at the state level, with programs like SMART and Net Metering, but executing something like this at a federal level could make solar more popular than ever before, especially since the cost to go solar is steadily decreasing. Imagine being able to go solar for less than you ever imagined, plus getting a hefty tax credit for it the following year! If this proposal is ratified, property owners who choose to go solar will benefit more than ever before, not only with a return on their investment, but also with additional financial incentives for the amount of energy their systems produce for the grid after installation.
This plan includes the allocation of block grants to state, local, and tribal governments to make renewable energy development more accessible to all communities, as well as procurement of utility-scale solar for federal organizations, so all government facilities will be harnessing renewable energy 24/7! It is currently still in negotiations with Congress, so it is not set in stone yet, but if it is signed into law, it would provide an abundance of funds to motivate homeowners and business developers alike to add solar to their properties.
If you’ve been thinking about installing a solar energy system on your home or business, we strongly recommend you take action as soon as possible! The American Jobs Plan is still up in the air for now, so at this point no one knows if the ITC will step down by 2022. We’ll continue to share news about the progress of these policy negotiations as they come out, to keep everyone up to date. However, we all know how slowly the government can move! Don’t miss out on the best tax incentives currently available by waiting another year. Call Solar Wolf Energy today to lock in your solar ITC… And stay tuned to learn more about potential opportunities to benefit even more from renewables in the future!