Are Solar Batteries Eligible for Tax Credits?
Battery storage takes your solar energy system to the next level by giving you more control over the electricity you produce. You can use your stored energy when it’s dark out to avoid on-peak electricity rates or during a power outage.
Now, you can even offset the extra cost of batteries with the federal solar tax credit. Solar batteries qualify for the solar tax credit, which reduces your installation costs by 30 percent.
What Is the Solar Battery Tax Credit?
The solar battery tax credit is part of the federal solar tax credit, a long-standing incentive for solar panel installation. In 2022, the solar tax credit was expanded to include solar battery storage as part of the Inflation Reduction Act. The new and improved tax credit is often referred to as the solar battery tax credit when it’s being applied to battery storage, but it is an all-encompassing credit that includes solar panels, solar batteries, labor costs, and more.
When Does the Solar Battery Tax Credit Expire?
The 30% tax credit will be eligible for solar panels and battery storage systems until 2032. It will then be reduced to 26% in 2033 and 22% in 2034. After that, the Inflation Reduction Act solar tax credit will be eliminated for residential solar. Commercial solar will be eligible for a 10% credit from 2035 on.
Do All Solar Batteries Qualify for the Tax Credit?
Most solar batteries are eligible for the tax credit. They only have to meet a few qualifications.
- Be installed at a residence owned by the taxpayer and used as their main home.
- Have a capacity rating of 3 kWh or greater.
The average capacity rating for a solar battery is about 10 kWh, making it easy to meet the size qualifications.
How Much Can You Save with the Solar Battery Tax Credit?
It’s important to note that the solar tax credit is a tax credit, not a rebate. You won’t receive a direct payment, but you will receive a credit on your federal taxes, reducing the amount you owe. The credit is worth 30% of your total installation costs. So, if you spend $10,000 on your installation, for example, your tax credit will be worth $3,330. There is no maximum limit to the solar battery tax credit.
How to Claim the Solar Battery Tax Credit
It’s easy to get your solar battery tax credit, and SouthFace Solar & Electric can help! To qualify for the credit, you must:
- Own your battery system
- Own the property your system is installed at
- Have taxable income
You don’t have to apply for the solar battery tax credit—you just need to claim it on your federal taxes. To get the credit, make sure you keep all receipts associated with your installation. Then, obtain and complete IRS Form 5695 (for commercial taxpayers, IRS Form 3468). Finally, add your credit information to your typical IRS Form 1040 or 1040NR.
SouthFace Solar & Electric is happy to answer any questions you have about the Investment Tax Credit for solar panels and batteries. but we are not tax professionals and the information shared in this article is for informational purposes only. We always recommend consulting with your tax advisor about your specific situation.
Solar Battery Storage Installation in Arizona
If you’re planning to install solar panels, you should include a battery. You’ll get more out of your investment and be in greater control of your home’s power.
SouthFace Solar & Electric can help you find the right solar and energy storage solution for your home. We are a locally owned solar company and our team has over 35 years of combined experience. Have questions about solar battery installation or solar battery incentives in Arizona? Just give us a call. We’re here to answer your questions and make it easy for you to go solar.
