The solar Investment Tax Credit has been a tremendous boon to solar consumers and the industry since first being introduced in the Energy Policy Act of 2005. Since then, numerous extensions have maintained the federal support for energy infrastructure, offering up to 30% in tax credits for residential and commercial solar energy systems. With the Inflation Reduction Act of 2022 (IRA), the solar Investment Tax Credit (solar ITC) has been expanded to nonprofits and other tax-exempt entities, such as municipalities and Tribal governments.
Additionally, the IRA expanded the program to storage-only projects whereas, previously, energy storage was only included if combined with solar.
Historically, since nonprofits and municipalities are tax-exempt, a tax credit did them no good and, as a result, these entities fell behind in solar installations and progress toward sustainability goals (i.e., “The 2030 Challenge” and “Ready for 100” campaign).
In order to provide the financial benefit for installing solar and/or storage, the IRS introduced a direct pay option. Put simply, this enables tax-exempt entities to receive a rebate check from the IRS to help defray the costs of a solar energy and/or energy storage system, encouraging a much wider pool of participants in the transition to renewable energy.
FYI: The expanded solar ITC direct payment option for nonprofits and municipalities includes projects installed in 2023.
This is truly a game-changer for organizations, municipalities, and the industry. For many smaller nonprofits, in particular, the cost of paying upfront for a solar, solar-plus-storage, or energy storage system can be prohibitive. With the ability to be reimbursed for 30% of the system cost – plus the promise of greatly-reduced (or eliminated) energy bills – making the move to clean, renewable energy becomes much more attainable.
Contact us today, and we would be happy to answer any of your questions about the expanded solar ITC as well as book an appointment with you to discuss installing a solar, solar plus storage, or energy storage system at your location!
Federal Solar Tax Credits for Businesses, Energy.gov (Office of Energy Efficiency & Renewable Energy)
What Nonprofits Need to Know About the Investment Tax Credit, Clean Energy Group