The Inflation Reduction Act at a Glance
Last month, President Biden signed the Inflation Reduction Act, the single biggest investment in both clean energy and the US Economy.
The Inflation Reduction Act (IRA) of 2022 is the largest federal investment to date in the fight against climate change. This legislation will invest in $269 billion into climate and energy programs aimed at helping the United States cut greenhouse gas emissions.
The bill is designed fight inflation by driving down energy costs, provide economic opportunity for disadvantaged neighborhoods, create jobs, and help the US cut greenhouse gas pollutants with the goal of a 40% reduction by 2030.
The bill has multiple renewable energy incentives. One of the bill’s strongest financial incentives is in the tax advantages of shifting to solar energy. The Solar Federal Tax Credit (ITC) was raised to 30%, and renewed through the end of 2032 (It was previously 26% and set to be permanently fixed at 10% in 2024).
The ITC is a dollar for dollar tax credit for up to 30% of the amount of the cost of installing a solar energy system. This credit is applied toward the tax year the solar energy system received permission to operate. Historically speaking, the ITC has proven to be the been the most effective component of climate policy has been enacted by the US Government. The 30% Tax Credit took effect upon the bill’s signing and applied retroactively towards any solar energy system that was installed in 2022.
New Economic Advantages of Going Solar and Green Energy Projects
The investment in energy security and climate change are a collection of subsidies for clean energy sources such as solar energy. The subsidies put the cost of green energy on the same playing field as fossil fuels and other cheaper pollutants.
Depending on the subsidy, properties will be able to claim them through tax filings, rebates, or in some cases, immediately at the point of sale.
In addition to expanding and extending the Solar Investment Tax Credit for over a decade, there are also subsidies for electric cars, EV chargers, heat pumps, energy efficient windows and many other green energy projects. This makes clean energy more affordable and desirable for business owners across the board.
Other tangible financial benefits of converting to solar energy include a Production Tax Benefit 10% tax credit if 40% of the components of the solar energy system are produced domestically. Previously, this tax credit was used primarily for wind farms and has now been expanded to benefit solar energy installation.
Beginning in 2023, businesses and investors will be allowed to transfer their tax credits for cash to unrelated parties. This benefits the solar economy as it expands green portfolio opportunities for third party investors.
Non-Profit properties are now able to access solar energy on a more even playing field as their organization will receive a direct payback of the value of their tax credit.
Growth of Solar and the Solar Economy
The Inflation Reduction Act is not only a step towards curbing rising costs domestically, it is also the first significant piece of legislation that illustrates how serious the U.S. is about combating climate change.
Investing in the green economy not only yields significantly increased profits for businesses, it also grows the economy as over 9 million new green jobs are predicted to be created over the next decade.
These job forecasts combined with the economic scale up yields greater capacity growth in the solar industry and make it easier for widespread adoption.
With these new solar energy economic incentives in place, now is the right time to explore becoming energy independent. Let Geoscape Solar show you how easy and affordable it is for businesses to convert to solar energy. Geoscape Solar has solar financing available for every budget and our financial experts will help your business maximize the available solar incentives. Contact Us to receive your complimentary property evaluation for solar energy.