Solar incentives in the USA: Understanding what’s on offer

Jun 10, 2024 | Latest News

Are you looking to harness the power of the sun? Solar panels for use in domestic homes and commercial purposes have grown in popularity in recent years. Whilst the prices of solar energy systems have reduced over time, the cost of purchase and installation is still high for many Americans. Ranging between $17,430 to $23,870, investment in solar energy solutions can be a large investment, especially for homeowners and small business owners. But did you know you could recoup some of these costs through various solar incentives and tax credits?

Disclaimer: We are not tax experts. For personalized and accurate tax advice, please consult a certified tax professional.

 

Federal Solar Tax Credits for Businesses

For businesses looking to invest in solar technologies, there are two tax credits available for businesses and other entities such as non-profits, in addition to local and tribal governments, which could be beneficial.

 

Investment Tax Credit (ITC)

ITC is a tax credit that reduces the federal income tax liability for a percentage of the cost of a solar system that was installed during the tax year. Solar systems that are placed in service in 2022 or later, and begin construction before 2033, are eligible for up to 30% of ITC. Eligible property includes projects such as Solar PV panels, CSP equipment, and more here.

 

Production Tax Credit (PTC)

The Production Tax Credit (PTC) is a per kilowatt-hour (kWh) tax credit for electricity generated by solar and other qualifying technologies for the first 10 years of a system’s operation. Adjusted annually for inflation, it reduces the federal income tax liability for a business. Businesses could be eligible for up to 2.75 ¢/kWh PTC, provided they meet the set-out labor requirements or are under 1 megawatt (MW) in size.

 

What projects are eligible for ITC and PTC?

Typically, project owners cannot claim both the ITC and the PTC credits for the same property, but can claim different credits for co-located systems such as solar and storage.

To be eligible for the business ITC or PTC, the solar system must be:

  • Located within the United States or U.S. territories
  • Use new and limited previously used equipment
  • Not be leased to a tax-exempt entity such as a school. Tax-exempt entities are eligible to receive ITC in a direct payment.

Find out more about ITC and PTC Tax Credits for businesses here.

Person walking though a field of solar energy sources

 

Federal Solar Grants Available

Outside of ITC and PTC tax credits, the Department of Agriculture offers grants to rural communities looking to install renewable energy systems.

REAP grants

The Rural Energy for America Programe provides loan financing and grant funding to agricultural producers and rural small businesses who are looking to invest in renewable energy systems, or make energy efficiency improvements. To be eligible, you must be either an agricultural producer or a small business, specific eligibility criteria can be found here. Funds may be used for the purchase and installation of renewable energy systems, including electric, solar, or gravity pumps for sprinkler pivots, to name a few.

Find out more about REAP Grants here.

Discover more renewable energy incentives

Various U.S. departments including the Department of Agriculture, and the Department of Energy, offer grants, loans, and incentives to those looking to install solar and renewable technologies.

Find out more here.

Investing in solar energy can be a significant financial commitment, but the potential savings and environmental benefits make it an attractive option for many homeowners and businesses. With federal incentives such as the Investment Tax Credit (ITC) and Production Tax Credit (PTC), along with grants like the Rural Energy for America Program (REAP), there are numerous opportunities to offset the initial costs of solar installations. These incentives are designed to make renewable energy solutions more accessible and affordable, ensuring that more Americans can harness the power of the sun.

Discover the power of solar watering pumps

Harness the power of the sun with our solar-powered water pump system. Perfect for small holdings and arid agricultural environments, our solar water pump is not only portable, but also easy to install. Allowing you to maximize watering efficiency, whilst saving both time and essential resources.

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Other resources

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Explore practical steps to help you maximize water efficiency when watering cattle or crops, ultimately reducing costs and promoting environmental sustainability. Find out more.

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Utilizing nature’s energy to provide sustainable means of water movement.

Soler Solutions
8904 Beckett Rd
West Chester 
Ohio
45069 
T: 513 874 7326  
F: 513 874 7294

info@solersolutions.com