Solar Tax Incentives for the Residential Clean Energy Property CreditThere are two energy-related tax programs for homeowners. The Energy Efficient Home Improvement Credit is geared towards homeowners who increase energy efficiency so that less electricity is used. Then there’s the Residential Clean Energy Property Credit, also called the federal solar tax credit. This credit is specifically for home installations and upgrades that generate electricity. It’s part of the government’s efforts to increase green energy resources.
Who Can Claim the Residential Clean Energy Property CreditThe Residential Clean Energy Property Credit is more inclusive than the Energy Efficient Home Improvement Credit. You can claim the credit if:
- The home is your primary residence.
- The house is your second home.
- The home is newly built in the year.
Tax Credit Amounts for 2022This is where the Residential Clean Energy Property Credit can get confusing. In 2022, Congress passed a bill that updated and extended the tax credit. It effectively changed the amount for the tax credit, but only for certain years. Here’s a quick look at how the tax credit amounts break down:
- Solar equipment installed between January 1, 2017 and December 31, 2019 will receive a 30% tax credit.
- Solar equipment installed in 2020 or 2021 receive a 26% tax credit.
- Solar equipment installed between 2022-2032 will receive a 30% tax credit.
- Solar equipment installed between 2033 will receive a 26% tax credit.
- Solar equipment installed between 2034 will receive a 22% tax credit.
What’s Eligible for the Residential Clean Energy Property CreditInstalling solar equipment isn’t the only way to take advantage of the Residential Clean Energy Property Credit. The federal government will provide kickbacks for a variety of energy-producing investments, including:
- Solar panels and solar cells (original installation only)
- Solar water heaters
- Electric vehicle chargers (up to $1,000)
- Fuel cell expenditures
- Residential wind turbines that are under 100 kilowatt production
- ENERGY STAR rated geothermal heat pumps
- Biomass fuel stoves with at least 75% efficiency rating