What Does the Inflation Reduction Act Mean for Commercial Solar Installations?
Sep. 30, 2022
Solar panels are a lucrative investment for businesses that can help make buildings better for employees and for your bottom line. Now, thanks to the passage of the Inflation Reduction Act of 2022, solar is an even smarter option for business owners who want to slash operating costs and increase profitability.
You’ve probably heard some buzz around the Inflation Reduction Act (IRA) and its efforts to address the climate crisis. Incentivizing the use of clean energy over fossil fuels is a critical component of the law, and renewable energy tax credits, including tax credits for commercial solar installation, account for a significant portion of its spending.
Keep reading to learn more about the Inflation Reduction Act and solar panels, and how your business can take advantage of new incentives to save money on solar installation.
30% Federal Solar Tax Credit for Commercial Solar Installation
The solar Investment Tax Credit (ITC) has been the best commercial solar incentive for decades, and the Inflation Reduction Act makes the solar tax credit even more attractive for businesses. The IRA increases the federal solar tax credit to its original 30% value, which means your business can reduce its federal tax liability by 30% of your total commercial solar installation costs. The increase is retroactive to 2022, so if you were already planning to claim the old 26% ITC on your 2022 taxes, you can now qualify for the new 30% credit.
The 30% solar tax credit reduces your upfront solar installation costs, making it easier for you to go solar now. The sooner you make the switch, the more money you can save on energy costs and earn through additional Massachusetts solar incentives like SMART for businesses.
The 30% Tax Credit Will Be in Effect for 10 Years
The new 30% solar energy tax credit isn’t going away anytime soon. The IRA extends the 30% tax credit for 10 years and also backdates to include all 2022 projects. The credit is available for commercial and utility-scale projects of all sizes, so whether you are thinking about investing in solar panels for your rental properties, the benefits of solar for your small business, or installing rooftop solar on a large industrial building, you can claim the credit.
There’s a New Direct Pay Option for Tax-Exempt Organizations
Historically, the federal solar tax credit has only been available to for-profit businesses that pay taxes. Because of this, solar ownership has been less viable for tax-exempt organizations, and power purchase agreements have been the only real option.
Thanks to the Inflation Reduction Act, tax-exempt organizations can now receive a direct payment worth 30% of their solar installation costs, making solar installation and ownership a more viable option for public schools, government buildings, and non-profit organizations.
Solar Battery Storage Is Included in the 30% Federal Solar Tax Credit
The new 30% solar tax credit includes battery storage, and for the first time (beginning in 2023), standalone solar batteries will be eligible for the solar tax credit. Adding battery storage to your commercial solar array can help you keep essentials running during a power outage, preventing downtime and wasted resources.
Talk to Boston Solar about Solar Energy for Your Business in Massachusetts
There are many ways solar can help your business in 2022 and beyond, and with the newly improved federal solar tax credit, there’s never been a better time to install commercial solar panels.
Boston Solar can help you navigate the tax benefits of going solar and make sure you don’t miss out on any incentives. We’re a leading commercial solar installer near you in Massachusetts, and we’ve helped hundreds of businesses and non-profit organizations install solar panels. Take a look at our completed commercial solar projects to see what solar could look like on your building, and don’t hesitate to reach out if you have any questions about the Inflation Reduction Act and the solar tax credit in 2022.
Get a 30% federal tax credit when you install commercial solar panels. Call 617-858-1645 or contact us to learn more.