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New 30% Solar tax credit
- Thread starter bayareaever
- Start date
I had my powerwalls installed WITH solar back in 2019. I am on a Time of Use plan, but have not been charging off the gird at night because I was worried I would lose my tax credit. But I wonder if this would grandfather me in? The previous tax credits never really made it clear on whether or not I could keep the tax credit and charge off the grid at night. But this seems to clear that up!
preilly44
Member
I just had my solar/PWs installed. Do the PWs get 30% too or is the battery portion not being backdated? I've heard it both ways....
preilly44
Member
It looks like battery installed with solar in 2022 still falls under the existing "Investment Tax Credit," which I believe doesn't even mention batteries but the IRS has interpreted that these batteries are "energy property" as defined as "equipment which uses solar energy to generate electricity, to heat or cool (or provide hot water for use in) a structure, or to provide solar process heat."
This would seem to also suggest these 2022 batteries can only be charged with solar if claiming the 26% "investment" credit.
Retroactive to 2022, what used to be called "Residential Energy Efficient Property" is now "Residential Clean Energy Credit" is what allowed for 30% -> 26% solar credit and is now increased back to 30% through 2032. Additionally starting 2023, this same credit will include battery storage of at least 3kWh. And because these 2023+ batteries are directly getting a credit as part of "clean energy," they can be charged however you want.
itsallaboutme
Member
Need to be clear about the credit. This 30% is not money you will receive back from the IRS it is just credit that will just keep deducting from whatever you owe throughout the years? That is what I was told but chatting with Tesla rep said you get back the money.
TBrownTX
Active Member
You need to pay income tax in excess of the value of the credit to get the entire amount. You may or may not see any of the “cash back” depending on your overall tax liability versus how much you paid throughout the year. If your tax liability at the end of the year is exactly zero (you paid all your taxes and the total exceeds your credit) then and only then will you “get back the money”.
MountainRatMat
Member
Depends how much you have to pay in taxes, although I think you can apply it over a few years.
itsallaboutme
Member
Okay I usually only owe state income tax. I got it now. Thanks I have a call with them on Monday to discuss more about everything else including why they came back with only 66% offset etc. Thanks
CrazyRabbit
Active Member
If you have zero federal tax liability you will never be able to utilize the tax credit.
itsallaboutme
Member
Okay so I was correct the first time it deducts what you owe from the federal tax. So it is not something they write you a check for or add as a deduction to lower your tax amount.
You keep mentioning "owe" when others are talking about tax liability. You can still get the tax credit benefit even if you would have gotten a refund so now an even larger refund as long as your tax liability was greater than the nonrefundable credits.
ucmndd
Well-Known Member
What you “owe” when you file your return is your tax liability minus any pre-payment you’ve made against that tax liability throughout the year (usually in the form of payroll wage deductions).
An example with round numbers:
You earn $100,000 in wages in a year. After completing your return, claiming any standard deductions, etc. the tax formula determines you have a tax liability of $10,000. Throughout the year, your employer has withheld $9,000 of your wages to offset that tax liability. Thus, you “owe” the IRS $1,000 extra dollars.
Now, the same example if you purchased solar during the same tax year:
You earn $100,000 in wages in a year. Your normal tax liability stays the same as the example above at $10,000. Now let’s say you buy a $30,000 solar array subject to the 30% tax credit. 30% of $30k is $9,000, so your $10,000 tax liability is reduced to $1,000. But your employer still withheld $9,000 from your wages through the year. So, when you file your return, you receive a federal refund of $8,000 ($9,000 withholdings minus $1,000 tax liability).
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