Midwest Solar Power has been installing solar since 2009, and we’ve seen a lot of ups and downs in the solar industry. This article is our take on the current federal incentives for solar, with some guided thoughts from organizations like RENEW Wisconsin, equipment distributors, and other installers.
What is the federal tax credit for solar anyway, and will it stick around with the new administration in 2025?
The federal solar tax credit, officially known as the Investment Tax Credit (ITC), is a valuable help in financing installation of solar PV systems for customers that was introduced in 2005 under the Bush administration. The ITC allows homeowners, businesses and nonprofits to claim a tax credit based on a percentage of the cost of installing a solar PV system.
Congress and President Biden extended the solar tax credit until 2035 through enactment of the Inflation Reduction Act (IRA). The IRA increased the size of the credit to 30% and expanded the credit to include not only solar panel systems but also battery backup systems. The solar tax credit is currently at 30% and is scheduled to decrease to 26% in 2033, 22% in 2034 and phased out entirely in 2035.
President Trump has said that he wants to repeal the IRA. What does this mean for the solar tax credit?
Full-scale repeal of the solar tax credit is unlikely.
While President Trump has signaled that he will pursue policies to increase production of fossil fuels and has been tepid, at best, about policies promoting expansion of renewable energy sources, that does not necessarily spell doom for the solar tax credit. Repealing the solar tax credit would require approval of Congress. There are strong indications that members of Congress on both sides of the aisle are aware that the existing solar tax credits are driving significant employment and economic growth in many parts of the United States. This leads most industry experts to conclude that it is unlikely that Congress would pass a full-scale repeal of the IRA and solar tax credits in the IRA. Repeal cannot be done by an executive order, only through legislative action.
As published in an article from The Hill, “18 House Republicans submitted a letter to House Speaker Mike Johnson (R-La.) urging him not to repeal the Inflation Reduction Act’s clean energy tax credits if Republicans maintain or expand their House majority in this year’s election. They emphasized that these ‘energy tax credits have spurred innovation, incentivized investment, and created good jobs in … many districts represented by members of our conference’.”
There is, of course, no way to predict with certainty what will happen.
Should I Still Consider Getting a Solar PV System with the Uncertainty About the Future of the Solar Tax Credit?
That’s a decision that is up to each individual based on their own circumstances. There is a strong case that there's never been a better time to install a system. The tax incentives currently available are as generous as ever, and according to SEIA, solar panel system prices are just about as low as ever, which makes it an opportune time to invest in solar. Given the possibility that President Trump and Congress may reduce incentives in the future, homeowners and businesses considering solar installations might want to act quickly. Moving forward now gives customers a chance to lock in the 30% solar tax credit by getting their system installed before any potential change in the credit (or price increases resulting from potential new tariffs). Acting now also enables customers to get on the solar install schedule early, before everyone else tries to squeeze in. If the solar tax credit is reduced or eliminated, the changes likely won’t take effect immediately. This gives anyone wanting to install solar a big incentive to move now to get their system up and running before any potential change in policy.
We here at Midwest Solar Power are prepared to help you realize your solar dreams knowing that we are here to guide you through this process.
For more information, click this link to see if a system is right for you. Our estimates, site visits, and quotes are always free and non-commital. Having us out to explore your options when the time comes to make a decision will help you get ahead of the rush, when it comes.
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