Updated June 2023. The federal income tax credit is here to stay for 10 more years. The owner of the solar project receives the credits and these flow through via K-1s to the shareholders.
Thru 2032 - 30%
2033 - 22%
2034 and after - 10%
You can now CARRY BACK the tax credit 3 years under new rules from the Inflation Reduction Act.
This means that an owner of solar system placed in service in 2024 can go back to 2021 and amend their tax returns to receive a refund.
There are add-on tax credit incentives for solar projects as follows:
This article put out by the U.S. Department of Energy is hands-down the most comprehensive solar tax webpage I have ever seen: click here.
See our article with example case study of how these add-on incentives can boost your solar IRR.
Projects >1MW will require prevailing wages to be paid by the installer (but Solar CFO believes that the labor market for solar talent is very tight right now and that many installers are already paying the equivalent of prevailing wages).
You can now CARRY BACK the tax credit 3 years or sell the credits to another party for cash.
We are still waiting for guidance to clarify rules about direct sales of federal tax credits, but there will be new rules which allow the owners of the tax credits to sell the credits to others in the open market. Word on the street is that these credits are trading for $0.80 to $0.95 cents on the dollar and the buyer of the credits will require indemnification from the seller that the tax credit is valid (there are insurance products available for this).
Here is a link to a great article about tax credit transferability from a leading law firm in the renewable energy space.