Inflation Reduction Act

The Inflation Reduction Act (IRA) is the single largest climate investment that the US government has ever made. Signed into law in August 2022, the legislation includes $369 billion in funding for climate solutions and environmental justice initiatives, with the ultimate goal of reducing carbon emissions by 40% by 2030.

What is included?

 Investment Tax Credit Increase

  • The Investment Tax Credit allows customers to receive a direct credit on their taxes for a percentage of the value of their solar project

  • The IRA increased the base value of the tax credit from 22% to 30% and extended it for another 10 years

  • Grid upgrades and interconnection costs can now be included in the tax credit

Direct Pay (Elective Pay) For Nonprofits

  • Tax-exempt entities including nonprofits, municipalities, and houses of worship can now receive their tax credit as a direct payment. Read our Direct Pay Explainer

Bonus Adders

The IRA created a number of bonus adders that can be stacked for a maximum of 70% tax credit, but most projects can expect between 30-50%.

Energy Community Adder: 10% (Guaranteed)

  • Sites are eligible if they are located in a brownfield, near a current or former coal-fired power plant, or in a census tract with a high rate of employment in the energy sector and high unemployment rates. Check eligibility here.

Domestic Content Adder: 10% (Guaranteed)

  • Projects must use a certain amount of US-produced components starting at 40% in 2023 and reaching 55% by 2027. All steel and iron components used for racking must be made in the US. More info here.

Low-Income Bonus Adders: 10-20% (Application Required)

The four categories of Low-Income Bonus Adders are outlined in the table to the right. These adders require a competitive application and a single project can only apply for one category. More information about the LI Bonus Adders is available in this blog post.

When Can My Organization Apply?

The 2024 ITC adder Application period is expected to open in Q2 2024

Reach out today to be ready to apply for the next round