Solar Tax Credits extended!
Inflation Reduction Act of 2022 extends Federal Solar Tax Credit
The US Federal Government offers a solar energy residential tax credit, known as the Solar Investment Tax Credit (ITC), and is applicable to your first/second home, which can be your boat! As long as there is a head, galley & bunk aboard and it is registered in the United States, your vessel may qualify. The Credits were due to expire but the Inflation Reduction Act of 2022 has extended it for a further 10 years. It is now also easier to include your batteries - time for that upgrade!
Who Can Take The Credit? "You may be able to take the credit if you made energy saving improvements to your home located in the United States in 2022. A home is where you lived in 2022 and can include a house, houseboat, mobile home, cooperative apartment, condominium....the home doesn't have to be your main home."
In 2022 this tax credit is now back at 30% on the total system cost of all qualified expenditures: this can include solar panels, charge controllers, inverters, wiring, batteries, parts and labor. There is no maximum limit for equipment placed in service after 2008. This credit can be retroactive, so long as the solar system was placed into service after January 1, 2006.
(Disclaimer: As always, please consult with your tax advisor or accountant for the most up to date tax info for your situation.)
It's easy to file! Step 1: Complete IRS Form 5695. Be sure to check you use the latest version of the form which is updated January/February each year (note: the above forms are for 2020) www.irs.gov/pub/irs-pdf/f5695.pdf
For instructions on how to complete Form 5695 download the instructions here www.irs.gov/pub/irs-pdf/i5695.pdf
Step 2: Once IRS Form 5695 is completed it gives a total that is then entered as a line item on IRS Form 1040. The two forms are then attached together and filed at the same time as your IRS Form 1040. https://www.irs.gov/pub/irs-pdf/f1040.pdf
If you can't use all of the credit because of the tax liability limit (that is, line 14 is less than line 13), you can carry the unused portion of the credit forward to the next year.
Federal Investment Tax Credit (ITC) Phase Out Dates and Details
Tax Credit on total system cost, placed in service:
Jan. 1, 2022 - Dec. 31, 2032 = 30% tax credit
Jan. 1, 2033 - Dec. 31, 2033 = 26% tax credit
Jan. 1, 2034 - Dec. 31, 2034 = 22% tax credit
After Jan. 1, 2035 = 0% tax credit
Here is a link to the Department of Energy's website that provides a description of the Federal ITC
Solar Tax Credits by State
Various states have their own solar energy tax incentives that may also apply to the purchase of a solar panel system for your boat. Depending on what state your boat is registered, you may be eligible for added tax incentives or rebates! The Database of State Incentives for Renewables & Efficiency (DSIRE) website has a wealth of information and is worth checking.
We have compiled a list of states with relevant solar energy tax incentives and rebates below but please check with your state department as program details are subject to change:
Residential Solar and Wind Energy Systems Tax Credit—Solar energy credit of 25% of the cost of the device, up to $1,000.
Solar and Wind Energy Credit—Income tax credit of 35% of the cost of equipment and installation of solar panels, with a limit of $5,000.
Residential Alternative Energy Tax Deduction—Income tax deduction of 40% of the cost of the solar energy system for the year in which the system was installed, plus a 20% deduction of the costs each year for three years after. The maximum deduction per year is $5,000.
Solar Energy System Tax Credit—Tax credit equal to 50% of the federal credit for residential arrays, up to $5,000.
Renewable Energy Equipment Exemption—A 100% sales tax exemption for solar equipment.
Solar Energy Systems Tax Credit—A 50% refundable tax credit that can be applied to solar electric systems.
Anne Arundel County Solar and Geothermal Equipment Property Tax Credit—One-time tax credit of 50% of the solar energy equipment material and installation costs, up to a maximum of $2,500. Available for residents of Anne Arundel County.
Sales and Use Tax Exemption for Renewable Energy Equipment—A 100% state sales tax and use tax exemption for solar equipment.
Residential Alternative Energy System Tax Credit—A $500 tax credit for the installation of a solar energy system.
Residential Small Renewable Energy Rebate Program—Rebate of $0.50 per watt, up to the lesser of $2,500 or 30% of solar panel system costs.
Solar Energy Sales Tax Exemption—A 100% exemption from state sales tax for solar energy equipment.
Solar Energy System Equipment Credit—Tax credit equal to 25% of qualified solar panel system equipment costs, up to a maximum credit of $5,000.
New York City Residential Solar Sales Tax Exemption—A 100% local sales tax exemption for solar energy systems in select areas.
Residential Energy Tax Credit—Credit of $1,500—or up to 50% of total costs, whichever is less—per year for up to four years for a maximum of $6,000.
Salem Electric Photovoltaic Rebate Program—Rebate of $600 for the first 3 kW installed and $300 per kW for any additional capacity, up to a maximum of 50% of solar panel system costs or $8,400.
Solar Energy, Small Hydropower, and Geothermal Tax Credit—Credit of up to 25% of the cost to purchase and install a solar energy system.
Renewable Energy Systems Tax Credit—Non-refundable tax credit of 25% of the installed solar panel system costs, up to a maximum of $2,000.
Renewable Energy Systems Sales Tax Exemption—Incentive of 100% of sales tax for the purchase of a solar energy system.
Fairfax Solar Energy Equipment Tax Exemption—A partial or full tax exemption for costs of solar panels and select other solar setups.
Renewable Energy Sales and Use Tax Exemption—A 100% exemption of sales and use tax for solar energy systems up to 10 kW.
Residential Solar Energy Tax Credit—A $2,000 tax credit for the installation of a solar energy system.
Renewable Energy Sales Tax Exemptions—A 100% exemption from sales and use tax for eligible solar panel system purchase.