Do Solar Batteries Qualify for Tax Credits?
The Inflation Reduction Act of 2022 expanded the Investment Tax Credit (ITC) for solar panels, making residential and commercial solar installation more affordable for homeowners throughout the United States. But the new law has left many wondering whether solar batteries get the tax credit, too.
The answer is yes! Solar batteries are eligible for the solar tax credit. You can get the federal solar tax credit for battery storage whether you are installing a new solar plus battery system, adding batteries to an existing solar panel system, or installing standalone battery storage (available starting Jan 1, 2023).
What Is the Inflation Reduction Act Solar Battery Tax Credit?
The tax credit for solar battery storage is the same tax credit that’s available for home and commercial solar panel installation. The credit, formally known as the Investment Tax Credit, was recently expanded by the Inflation Reduction Act. It’s worth 30% of your total installation costs and will be available until 2032. After that, the tax credit will be reduced to 26% in 2033 and 22% in 2034. After that, Inflation Reduction Act solar tax credit will be eliminated for residential solar. Commercial solar will be eligible for a 10% credit from 2035 on.
How Much Can You Save with the Inflation Reduction Act Battery Storage 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 $3,000.
How to Get the Solar Tax Credit for Solar Batteries
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.
SouthFace Solar & Electric is happy to answer any questions you have about the Investment Tax Credit for solar panels and batteries. However, we are not a tax professional and should not be relied on for tax or legal advice. We always recommend consulting with your own tax advisor before making any decisions.
Learn More About Battery Storage Installation Near You
SouthFace Solar & Electric is Arizona’s premier solar photovoltaic designer and installer. We can help you find the right solar and energy storage solution for your home. Our team has over 35 years of combined experience and is ready to bring more power to you with professional solar panel and battery installation! 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.