Good News for Tick Tock Energy Solar and Wind Customers!
Additional extensions have been granted allowing more time to capture this major tax incentive for solar. In December of 2020 a new COVID-19 stimulus bill was signed into law by Congress and the President. This bill included important tax credit extensions for solar energy, wind energy and energy technologies including geothermal, fuel cells, microturbines and others.
The COVID-19 Stimulus Bill extends the investment tax credit (ITC) under Section 25D by another two years.
Under these new provisions:
- Solar projects completed in 2021 and 2022 are eligible for this 26% federal income tax credit.
- In 2023, the tax credit is scheduled to drop to 22%.
The ITC will phase out to 0% in 2024 for residential solar arrays.
Read more about residential solar incentives here.
Tax Credit Extension for Commercial (& Farm) Solar Projects:
Continuity requirements set by the Internal Revenue Service (IRS) for commercial projects are not affected by this Legislation. In general projects are required to be in service within four years of starting construction to qualify for that years available ITC. In short, this means:
- Solar projects starting construction in 2020 must be in service by the end of 2024.
- Solar projects starting construction in 2021 or 2022 must be in service by 2025 and 2026 to meet requirements for the 26% ITC.
- Projects beginning construction in 2023 must be placed into service by 2025 to qualify for the 22% ITC.
- Projects starting construction in 2024 and/or placed in service after 2025 should qualify for 10%.
An ITC for standalone storage batteries were not addressed in this bill, but there is IRS guidance currently in place which examine the potential for an ITC for storage connected with qualified projects. The IRS has also promised additional guidance for an ITC regarding storage.
Read more about commercial solar incentives here.