As of August, the Inflation Reduction Act of 2022 has come into effect. This new act pushes for more electrification of our grid as well as more of an incentive for consumers to consider a renewable energy source for their home, business, farm, etc.
For consumers, this is great news. The previous federal tax credit stood at 26%, but with the Inflation Reduction Act of 2022, it is now 30% for the next 10 years. That is a 4% increase, allowing consumers interested in solar to act now. For the first time, this federal tax credit also includes residential battery systems. This means that homeowners and solar customers will see a bigger break on their investment.
While hearing of the federal tax credit increase, you might wonder, how will this actually support solar savings? Reports have shown that electric rates are predicted to be 2.5 times higher in the next 10 years. This is due to the consistently increasing prices of fossil fuels such as coal and natural gas. Having a larger tax credit allows consumers to get more money back on the full cost of their solar energy systems as a credit against their total tax liability for the year the system was installed. Consumers can immediately see more savings than before.
This new reduction act will now lead to a positive push in the direction of giving more consumers the opportunity to invest in a renewable and reliable energy source. With the many benefits it provides such as lowering of energy costs and increasing exposure of energy security systems, the Inflation Reduction Act of 2022 is sure to leave consumers with peace of mind that their decision to use solar panels and battery systems will save them more money than ever before.