More people add house batteries every year, particularly when installing solar panels. Energy storage has many advantages, including decreasing a home’s reliance on traditional electric sources and, in some cases, lowering electricity bills. It also offers a backup power source should there be a power outage. The difficulty is that batteries are a rather hefty investment, with typical home battery systems costing between $10,000 and $20,000.

But homeowners wishing batteries are lucky – battery installations qualify for the federal renewable energy tax credit. This tax credit,  referred to as the solar tax credit or the federal tax credit, can go up to  30% coverage of the costs of a battery installation. This makes it one of the enormous incentives available for energy storage.

How much is the federal tax credit cover for solar battery installations?

The federal clean energy tax credit can cover up to 30% of installation costs for many clean energy projects like solar, battery, and geothermal heat pump installations. Therefore, a battery installation that costs $10,000 would be eligible for a $3,000 tax credit. The entire 30% tax credit is still available through the year 2032. The tax credit value will decrease to 26% in 2033 and fall again to 22% in 2034 before ending in 2035.

The solar tax credit is just like other tax credits. It offsets what you borrowed in federal income taxes.

If your tax due is less than the value of your tax credit, the remaining credit can be taken over to the following year’s taxes. For example, if your tax credit is worth $3,000 but you only owe $2,000 in taxes, the remaining $1,000 can be utilized to lower your taxes the next year.

How much will a battery system cost with the tax credit?

The final cost of a battery system will vary depending on the equipment used and the labor costs, which can vary quite a bit. For an average battery installation, you can anticipate obtaining a tax credit between $3,000 and $5,000.

• Uncategorized