Solar Industry News

Residential Clean Energy Credit: New Incentives for a Bright 2023

The Inflation Reduction Act (IRA), signed into law last year, was the most meaningful climate legislation passed in U.S. history. This investment in climate action could reduce carbon emissions by 6.3 billion tons in the next decade. The incentives included in the bill, many of which went into effect January 2023, make solar energy technologies more accessible and affordable to a wider range of people.

Below, we've summarized the incentives included under the IRA's Residential Clean Energy Credit we're most excited about for our Solar Champion community:

Graphic guide to the residential clean energy tax credits
 
Residential Solar Tax Credit
 

Mayer-final-nh.pngThe solar tax credit allows households to deduct 30% of the cost of installing a solar energy system from their federal taxes. This will be available until the end of 2032, at which point it will drop to 26%.

The credit can also be carried forward to future tax years if you cannot take the full credit in the year the system was installed.

Households can also receive a 30% tax credit up to $600 for an electrical panel upgrade. It can only be claimed if the panel is upgraded in conjunction with another upgrade covered by federal tax credits, such as a solar panel or heat pump installation. 

For more details, visit our comprehensive guide to the Federal Solar Tax Credit.

Residential Battery Storage Tax Credit


Starting January 2023, households can receive an uncapped 30% tax credit for a battery storage installation, even if it's not paired with a solar system. An average battery storage installation costs about $18,000, meaning the average tax credit will be around $5,400. Your actual costs will depend on a variety of factors, including the size of your house and size of your planned battery storage installation.

Residential Heat Pump & Heat Pump Water Heating Tax Credits
 

SHappy-Heatpumpers-Chadbourne2.jpegtarting in January 2023, households can receive a 30% tax credit for heat pumps and heat pump water heaters, capped at $2,000 per year. The credit resets each tax year, effectively becoming available again for additional projects.

Additionally, there are also rebates available for low-to-moderate-income households, thanks to the High-Efficiency Electric Home Rebate Act (HEEHRA). For more information, please visit our LMI Programs page.

Electric Vehicle & EV Charging Tax Credits
 

SUnsquatch EV charger.jpegThe US federal EV charging tax credits for residential customers, which offers homeowners 30% of the cost of hardware and installation, lapsed at the end of 2021. We expect it to be reinstated in the near future. The tax credit is for the installation of charging infrastructure, and is capped at $1,000 for residential customers.

The federal EV tax credit for manufacturers offers a tax credit of up to $7,500, depending on battery size with a minimum of 7 kilowatt hours. Additional guidelines will be released in early 2023. Previously owned electric vehicles (also known as “used vehicles”) are eligible for a tax credit of up to $4,000. All vehicles must be made by a qualified manufacturer.

For more information, visit our guide to EV Charging Incentives.

Additional Energy Efficiency Tax Credits
 

There are additional incentives for home energy efficiency updates, such as weatherization and electric panels. You can find more information on Rewiring America's IRA Savings page.