The Inflation Reduction Act signed into law by President Biden on August 16, 2022, gives new life to the federal tax credit for the purchase and installation costs of residential solar-power systems and provides guidelines allowing batteries to also qualify for the credit.
The solar credit is a percentage of the cost of a solar electric system installed on a taxpayer’s first or second residence located in the U.S. Before the passage of the Inflation Reduction Act the solar credit was being phased out by slowly reducing the credit percentage from 30% to 22% over several years, and the credit was scheduled to end after 2023. The Inflation Reduction Act extends the credit through 2032 at 30% before phasing it out in years 2033 and 2034.
Those who qualify for the credit in 2022 will receive a bonus, as the credit for 2022 was 26% under the prior law phase out, but the legislation has returned the credit to 30% for 2022. The following table summarizes the credit for the past and the future years under this the new legislation.Continue reading →