New Solar Investment Tax Credit

What is it? How does it work?

Investment Tax Credit offered by the U.S. federal government which helps reduce tax liability by a certain percentage of the investment costs of a new solar energy project just got better thanks to the Inflation Reduction Act that started in August 2022.

The costs associated with installing solar panels are eligible by the federal solar tax credit. The cost of the solar panels, racking, wiring, inverters, labor associated with installation, and sales tax is covered by the tax credit.
Solar systems installed before 2033 are eligible for a tax credit equal to 30% of the costs of installing solar panels.
Solar systems installed in 2033 will receive a 26% tax credit, while systems installed in 2034 will get a 22% tax credit before the tax credit expires completely in 2035.
To qualify for the tax credit, you must own the solar panels, have a taxable income, and it must be installed at your primary or secondary residence.
The solar tax credit is non-refundable, meaning if your credit is worth more than what you owe in taxes, you’re not going to get any sort of check or refund for it. But, that doesn’t mean you won’t get the full value of it. Any leftover value will carry over and be applied to your taxes the next year.
Energy storage is covered by the 30% tax credit with the passage of the Inflation Reduction Act, battery systems paired with solar panels in 2023 can get the full 30% credit. If the battery is installed with solar panels, the battery costs will be bundled with the rest of your solar installation costs. The batteries don’t even need to be connected to solar panels to qualify! To receive the tax credit, batteries must be at least 3 kWh (kilowatt-hours) in size. Mastervolt MLI 3000 230Ah battery is 3 kWh and the MLI 6000 460Ah is 6 kWh.

Here is a link to Energy.gov website click here.

So does an RV qualify for this deduction?

U.S. Code § 25D - Residential energy efficient property Section (d) paragraph (2) states:

(d) Definitions

For purposes of this section—

(2) Qualified solar electric property expenditure

The term “qualified solar electric property expenditure” means an expenditure for property which uses solar energy to generate electricity for use in a dwelling unit located in the United States and used as a residence by the taxpayer.

This tax credit may apply to your RV if it qualifies as, or has been accepted by the IRS as, a second home for tax purposes. You must own the dwelling unit in question, not rent it. You also must own your solar energy system, rather than lease it from a third-party provider, in order to be eligible for the ITC.

When the time comes to file your taxes fill out the IRS Form 5695 to claim the credit. If you use tax filing software, make sure you look for any questions about clean energy or investing in solar energy for the year.

Solar is a worth while investment. Solar is a clean energy technology that can help reduce the carbon footprint while decreasing reliance on external fuels. Today’s solar panels are more efficient, highly durable and easy to maintain.

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