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.