On August 7, the Senate passed the Inflation Reduction Act, which pledges $369 billion to clean energy and climate spending on the national level. On August 12, the House of Representatives passed it into law and finally, on August 16, President Biden signed it the law to make it official. This new law is a huge step forward for clean energy and battling the climate crisis.
What is the law?
The Inflation Reduction Act contains a wide range of incentives and tax credits to support clean energy sources, such as electric vehicles, nuclear power, and of course, solar energy (1). The law’s goal is to lower energy costs for Americans, provide energy security, decrease carbon emissions from a variety of different industries, and alleviate the climate crisis.
How does this help us?
Electricity customers across the country will see great benefits through the passing of the Inflation Reduction Act. The bill’s tax credit provisions will be on the tax code for a decade (1). This ends the uncertainty around the extension of the federal ITC for solar, which was originally due to expire after 2023. Now, the ITC is extended until December 31, 2034 at a whopping 30% (3).
This means that for every solar project installed, homeowners can claim up to 30% of the total project cost as a credit on their tax return. For example, on a $20,000 project, up to $6,000 could be claimed as a tax credit– and that is before state incentives come into play.
Plus, we can also consider the impact the Inflation Reduction Act will have on our economy, as the extension of the ITC provides certainty in the clean energy industry and offers opportunities to create jobs in the industry. In addition, generating more power from renewable energy substantially reduces volatility in home electricity prices caused by shocks in oil and gas markets, such as Russia’s invasion of Ukraine earlier this year (4).
Go Solar to Receive Best Incentives
Now that the Inflation Reduction Act has been passed, there has truly never been more certainty with investing in solar energy. Homeowners across the country are guaranteed up to 30% of their total project cost as a tax credit from the federal government for the next decade–and will most likely be eligible for even more through their state incentives (2). Fortunately for New Yorkers, New York’s solar incentives are the best in the United States.