Does The IRS Solar Tax Credit Phase Out?

irs solar investment tax credit ITC phase out?

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According to the Solar Energy Industries Association (SEIA), the solar Investment Tax Credit (ITC) provides a 30% investment tax credit for residential and commercial solar systems.

The ITC is one of the most important federal policy mechanisms to support the deployment of solar energy in the United States.

The IRS allows a tax deduction of thirty percent of the cost of a solar system, including labor and expenses, for any individual or business, through 2023.

However, the Solar ITC is often threatened with extinction by partisan politics driven by competing energy industries: fossil fuels vs. renewable energy.

Despite the fact that renewable energy is a growing industry, and fossil fuels are waning… There is a phaseout period for the ITC.

When Does the IRS Solar ITC Phase Out or Expire?

The ITC was in danger of expiring in 2015.

The SEIA successfully advocated for a multi-year extension of the credit in 2015, which provides business certainty to project developers and investors. The ITC continues to drive growth in the industry and job creation across the country.

To find out when the Solar ITC expires visit CarbonTaxCalc.com for real time counters that show how much time is left before the ITC expires.

carbon tax calc.com

Solar energy has experienced a 59% CAGR over the past decade, thanks to programs such as CPACE which allow you to get a new roof for your commercial building for free.

SEIA History of the ITC

According to the SEIA website, the Energy Policy Act of 2005 (P.L. 109-58) created a 30 percent ITC for residential and commercial solar energy systems that applied to projects placed in service between January 1, 2006 and December 31, 2007.

In 2006, the Tax Relief and Health Care Act (P.L. 109-432) extended these credits for one additional year through December 31, 2008.

In 2008, the Emergency Economic Stabilization Act (P.L. 110-343) included an eight-year extension of the residential and commercial ITC.

It eliminated the monetary cap for residential solar electric installations and permitted utilities and companies paying the alternative minimum tax (AMT) to qualify for the credit.

In 2015, the Omnibus Appropriations Act (P.L. 114-113) included a multi-year extension of the residential and commercial ITC.

It changed the previous “placed-in-service” standard for qualification for the credit to a “commence construction” standard for projects completed by the end of 2023.

In addition to the commence construction guidance underway at the Treasury and IRS referenced above, a broader regulatory project is also underway defining what property qualifies as solar energy property as defined under Section 48.

Examples of property under consideration are energy storage, carports, solar canopies and roofing.