Signed into law on Dec. 27, 2020, a massive $2.3 trillion omnibus bill will extend a 26% solar investment tax credit (ITC) for two years. Previously, the ITC was scheduled to drop to 22% in 2021, 10% in 2022, and zero percent for residential solar installations in 2023. Packaged with $900 billion in COVID-19 relief, the ITC extension is part of a $1.4 trillion spending bill.
Read the ITC revision in the 5,000 page bill. The solar ITC extension language for residential solar is on page 2,448.
Despite the ITC extension, high tariffs still remain on imported solar panels.
Solar installation tax credits have broad support
The first ITC became law in 2005. Several extensions passed since with bipartisan backing.
In 2019, the Solar Energy Industries Association (SEIA) sent a letter to Congress co-signed by 70 disparate groups, including the National Farmers Union, Audubon Society, National Ground Water Association, National Rural Electric Cooperative Association, and higher education, geothermal, and wind groups, to extend the ITC for solar installation.
Energy Storage Investment
In addition to providing $600 in relief, the new law also earmarks $1 billion over five years for Better Energy Storage Technology (BEST). The BEST Act provides federal investment into energy storage research and development.
In addition to the federal ITC, some states and municipalities have tax incentives, credits, and rebates to collect.
But not all states have solar incentives…
For example, Texas solar has no in-state incentive, but many Texas utilities offer rebates or will pay directly for solar generation.
In contrast, businesses and homeowners with New Mexico solar installations can take a 10% tax credit up to $6,000 in the New Mexico Solar Tax Credit in addition to the ITC.
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Did you know?
The new legislation is the longest bill to pass Congress. At 5,593 pages, it nearly doubles the previous record from 1986, a 2,847-page tax reform bill.