Solar energy helps lower carbon emissions, is an immediate source of electricity for operations, lowers the cost of utility power, and can qualify for the IRS energy storage tax credit. Homeowners, businesses, and commercial-scale enterprises install solar PV arrays coupled with energy storage systems and batteries for various reasons. They are also known as the ITC for energy storage.
Tax credit for solar batteries and other clean energy products are the result of the federal investment tax credit (ITC) passed in 1962 to protect American businesses from emerging foreign competition.
Before 1962, solar panels for home use in Florida emerged as energy sources. Shortly after that, solar batteries became mainstream. The more recent Tesla Powerwall incentives sparked a market demand to add battery banks to residential and commercial solar power systems in Florida.
Adding energy storage systems to solar PV installations has become the ultimate solar energy ecosystem over the past few years. And federal energy storage incentives through the ITC help the overall return on investment.
What is the Federal Investment Tax Credit?
The Investment Tax Credit (ITC) is currently a 26 percent federal tax credit claimed against the tax liability of either a residential or commercial solar investor. Any investor in renewable energy can participate.
The ITC energy tax credit percentage will lower from 26 percent in 2022 to 22 percent in 2023. After 2023 the ITC ends.
Solar roofing in Florida and backup storage systems qualify for the federal ITC.
HOW DOES THE ITC WORK?
The IRS energy storage tax credit is a dollar-for-dollar reduction in the income taxes that a person or company would otherwise pay the federal government.
The amount of the credit is 26% of the total battery backup investment in the year 2022. The percentage drops to 22 percent in 2023 and zero after that.
If an energy storage investment occurs in 2022 for $10,000, the ITC amount would equal a $2,600 tax credit, which is 26 percent of the total amount paid.
We recommend that you consult a financial advisor or accountant to determine if an energy storage investment ITC for the solar battery is suitable for you.
Do solar batteries qualify for the solar tax credit in 2022?
ITC includes several renewable energy production products, including solar, wind, and hydro systems. The ITC also includes the energy backup batteries attached to these systems as an energy storage tax credit.
The battery storage ITC is called; solar battery tax credit or federal tax credit for battery storage. Both are the same program.
TESLA POWERWALL TAX CREDIT
Manufactured by Tesla, Inc., the Tesla Powerwall is a rechargeable lithium-ion battery bank that stores your solar energy for use when the sun isn’t shining or during utility grid outages.
A Tesla Powerwall tax credit does apply to the Florida Tesla Powerwall installation under the federal ITC, as does the cost of installing a Tesla charger at home.
How to get battery storage tax credits: detailed instructions
The solar system investor should directly contact the IRS, your financial advisor, or accountant regarding receiving the appropriate ITC tax forms. The responsibility of proper filing is that of the investor.
FAQ about ITC
CAN YOU EARN THE ITC IF YOU ADD BATTERY STORAGE TO AN EXISTING SOLAR SYSTEM?
Solar panels for home use in Florida already in operation can add battery backup systems and apply their renewable energy tax credits described in the ITC. Contact your financial advisor or accountant regarding your tax situation.
HOW TO CHECK IF YOUR SOLAR BATTERY SYSTEM IS ELIGIBLE FOR THE SOLAR TAX CREDIT?
It is recommended that anyone investing in solar should consult their financial advisor or accountant about how to understand and apply your ITC.
WHEN DOES THE FEDERAL SOLAR TAX CREDIT END?
Thanks to the popularity of renewable energy goals, the federal ITC has been extended multiple times since 2007. The current 26 percent ITC will lower to 22 percent in 2023 and then expires in 2024. The removal of ITC has brought urgency to investing in solar now or before the program ends in 2024.
IS THERE A STATE LEVEL FOR SOLAR BATTERY INCENTIVES?
Since July 1997, solar PV energy systems and battery banks have been exempted from Florida’s sales and use tax. The exemption applies to all solar energy PV arrays and associated components, such as batteries. You can calculate the state sales tax savings and federal ITC into the ROI of solar systems to truly estimate the total savings of going solar.
OTHER INCENTIVES AND REBATES TO KEEP IN MIND
Battery systems for solar PV arrays are currently in extreme demand. Batteries are in such high market demand that you could experience a waiting list of several months for installation.
Because of this, battery brand expansion through rebate programs by Tesla, Enphase, and other battery manufacturers is not necessary.
However, farms, agricultural, ranches, and small businesses in rural Florida areas can also apply for a federally supported USDA REAP grant.
Want to get an estimate for your solar system? Get in touch!
When calculating the total return on investment (ROI) for installing a solar PV energy system and a battery backup bank, you should consider many factors, including understanding the federal ITC program.
Established solar pros of Florida for over thirteen years, PPM Solar’s team will personally review your solar project with you.
Click or call us today for a free, no-obligation estimate.
