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Solar Tax Incentives

The information below is sourced from the federal Office of Energy Efficiency and Renewable Energy but does not constitute professional tax advice or other professional financial guidance and may change based on additional guidance from the Treasury Department. It should not be used as the only source of information when making purchasing decisions, investment decisions, tax decisions, or when executing other binding agreements.

What is the Investment Tax Credit?

The investment tax credit (ITC) is a tax credit that reduces the federal income tax liability for a percentage of the cost of a solar system that is installed during the tax year. 

Under the Inflation Reduction Act of 2022, there is a new provision for the transfer of credit whereby eligible taxpayers who are not eligible for direct payment, may sell all, or a portion, of the tax credits for a given year to an unrelated eligible taxpayer. 

Payments for the credit must be made in cash and are not considered gross income, for federal purposes

What projects are eligible for the ITC?

To be eligible for the business ITC, the solar system must be:Located in the Un