Solar Tax Credit Calculator – Inflation Reduction Act

Wondering which credits and rebates you qualify for? Use our IRA clean energy and solar tax credit calculator to get an estimate of how much you can save.

The Inflation Reduction Act (IRA), passed in August 2022, extends and increases incentives for homeowners and corporations to make the switch to clean energy sources. For the average American, the benefits of the Inflation Reduction Act include improved tax credits for solar panels and increased financial incentives for buying an electric vehicle.

Inflation Reduction Act rebate and credit guide

Here’s a detailed breakdown of all of the rebates and credits available in the Inflation Reduction Act.

Home Solar Panels

What you get: A tax credit worth 30% of the cost of installing solar panels for your home.

Eligibility: Available to all property owners, no income limits. If a condominium installs solar panels, condo owners may claim a tax credit proportional to 30% of their contribution towards the project.

When can you get it: This tax credit is available now until 2035. The tax credit starts to decline in 2033 and will go away completely in 2035.

Electric Vehicle Credits

What you get: A tax credit worth 30% of the price, up to $7,500 for new vehicles and $4,000 for used vehicles.

Eligibility: Income limits apply. See the table below and see the next section of this article for a full breakdown of the new electric vehicle credits created in 2022.

	New Electric Vehicle	Used Electric Vehicle
Who Qualifies?	Single tax filers with a modified adjusted gross income under $150,000 Married couples filing jointly with income under $300,000 Individuals who file as head of household with an income under $225,000	Single tax filers with a modified adjusted gross income under $75,000 Married couples filing jointly with income under $150,000 Individuals who file as head of household with an income under $112,500
What Vehicles Qualify?	Sedans under $55,000 SUVs, trucks, and vans under $80,000	Vehicles that are at least two years old and under $25,000

When can you get it: This tax credit is available starting January 1st, 2023. Check with dealerships to see which electric vehicles will be eligible for the credit.

Residential Clean Energy Credit for Battery Storage Technology

What you get: A tax credit worth 30% of the cost of installing a battery storage device for the residence you live in.

Eligibility: Available to all property owners, no income limits. The battery must have a storage capacity of 3 kWh or more.

When can you get it: This tax credit is available now until 2035. The tax credit starts to decline in 2033 and will go away completely in 2035.

Clean Energy Credits for Windmills, Geothermal

What you get: A tax credit worth 30% of the cost of installing a qualified clean energy system to power your home. This can include a small windmill, geothermal heat pump, or other more niche qualified projects listed here.

Eligibility: Available to all property owners, no income limits.

When can you get it: This tax credit is available now until 2035. The tax credit starts to decline in 2033 and will go away completely in 2035.

Window and Door Tax Credits

What you get: A tax credit worth 30% of the cost of installing new energy efficient exterior windows and exterior doors. No lifetime maximum so you can claim the credit multiple years.

Eligibility: Available to all property owners, no income limits. Maximum allowable credit of $600 for windows and skylights per year. Maximum credit of $250 for any single exterior door, and $500 maximum for all exterior doors claimed in a single year. When combined with the “energy property” tax credits (see next entry), the combined amount cannot surpass $1,200 for a single year.

When can you get it: This tax credit is available January 1, 2023. It requires states to participate in the program which could lead to implementation delays depending on your location.

Energy Property Tax Credit

What you get: A tax credit worth 30% of the cost of any “qualified energy property”. The bill defines qualified energy property as the following –

• An electric or natural gas heat pump water heater
• An electric or natural gas heat pump
• A central air conditioner
• A natural gas, propane, or oil water heater
• A natural gas, propane, or oil furnace or hot water boiler
• A biomass stove or boiler

Eligibility: Available to all property owners, no income limits. Maximum allowable credit of $600. The newly installed devices must meet certain energy efficiency criteria, so be sure to check with your installer before purchasing. When combined with the window, skylights, and door tax credits, the combined amount cannot surpass $1,200 for a single year.

When can you get it: This tax credit is available January 1, 2023. It requires states to participate in the program which could lead to implementation delays depending on your location.

Heat Pump Tax Credit & Rebate

What you get: A tax credit worth 30% of the cost of a heat pump or heat pump water heater. A rebate of up to $1,750 towards a heat pump water heater or $8,000 towards a heat pump.

Eligibility: The credit is available to all taxpayers, no income limits. Maximum allowable credit of $2,000. The heat pump rebate has a maximum of $8,000, and the heat pump water heater rebate has a maximum of $1,750. The rebates are available to anyone making no more than 150% of the “area median income”. It’s not specified if the median incomes will be calculated at state, county, or zip code level. A maximum of $14,000 in rebates can be claimed per year.

< 80% Average Income	80-150% Average Income	>150% Average Income
100% of the cost (up to limit)	50% of the cost	0%

When can you get it: This tax credit and rebates are available January 1, 2023. It requires states to participate in the program which could lead to implementation delays depending on your location. The rebates are intended to be given at the time of sale so it’s immediately taken off the price, but it will depend on your state and retailers being set up to participate.

Insulation, Ventilation, and Air Sealing

What you get: A rebate of up to $1,600 for insulation, air sealing, and ventilation for your home. No lifetime maximum so it can be claimed multiple years.

Eligibility: The rebates are available to anyone making no more than 150% of the “area median income”. The full $1,600 can be claimed regardless if that’s 100% of the cost, or 50% of the cost. For example, if you spend $4,000 on insulation, you can still claim a $1,600 rebate. A maximum of $14,000 in rebates can be claimed per year.

< 80% Average Income	80-150% Average Income	>150% Average Income
100% of the cost (up to limit)	50% of the cost	0%

When can you get it: This rebate is available January 1, 2023. It requires states to participate in the program which could lead to implementation delays depending on your location. The rebates are intended to be given at the time of sale so it’s immediately taken off the price, but it will depend on your state and retailers being set up to participate.

Electric Appliance Upgrade Rebates

What you get: A rebate of up to $840 for an electric stove/range/oven, $1,750 for an electric water heater, $840 for an electric clothes dryer.

Eligibility: The rebates are available to anyone making no more than 150% of the “area median income”. The full amount can be claimed regardless if that’s 100% of the cost, or 50% of the cost. Appliances will need to be highly energy efficient, but exact standards aren’t yet set in stone. A maximum of $14,000 in rebates can be claimed per year.

< 80% Average Income	80-150% Average Income	>150% Average Income
100% of the cost (up to limit)	50% of the cost	0%

When can you get it: This rebate is available January 1, 2023. It requires states to participate in the program which could lead to implementation delays depending on your state. The rebates are intended to be given at the time of sale so it’s immediately taken off the price, but it will depend on your state and retailers being set up to participate.

Electric Panel and Wiring Tax Credit and Rebate

What you get: A tax credit for 30% of the cost, up to $600. A rebate of up to $4,000 for an electrical panel and $2,500 for rewiring.

Eligibility: To be eligible for the tax credit, the panel upgrade must be required to enable the use of other qualified energy improvements being made to the home, and the panel must have a capacity of 200 amps or more.

The rebates are available to anyone making no more than 150% of the “area median income”. The full amount can be claimed regardless if that’s 100% of the cost, or 50% of the cost. A maximum of $14,000 in rebates can be claimed per year.

< 80% Average Income	80-150% Average Income	>150% Average Income
100% of the cost (up to limit)	50% of the cost	0%

When can you get it: This rebate is available January 1, 2023. It requires states to participate in the program which could lead to implementation delays depending on your state. The rebates are intended to be given at the time of sale so it’s immediately taken off the price, but it will depend on your state and retailers being set up to participate.

New tax credits for electric vehicles in 2023

The Clean Vehicle Credit has also been extended through 2032, providing a tax credit of up to $7,500 for the purchase of a new all-electric or hybrid plug-in vehicle. The new Inflation Reduction Act also adds a new credit for the purchase of a used electric vehicle equaling 30% of the vehicle’s price, up to $4,000. This new credit will go into effect in 2023.

	New Electric Vehicle	Used Electric Vehicle
Who Qualifies?	Single tax filers with a modified adjusted gross income under $150,000 Married couples filing jointly with income under $300,000 Individuals who file as head of household with an income under $225,000	Single tax filers with a modified adjusted gross income under $75,000 Married couples filing jointly with income under $150,000 Individuals who file as head of household with an income under $112,500
What Vehicles Qualify?	Sedans under $55,000 SUVs, trucks, and vans under $80,000	Vehicles that are at least two years old and under $25,000

The income limits above apply to the year that you’ll be filing for the tax credit, or for the previous taxable year. So if you are a single tax filer that will be making more than $150k in 2023, but made less than $150k in 2022, you would still be eligible for the clean vehicle credit on your 2023 tax return.

Note that part of the Clean Vehicle Credit is determined by the size of the battery in the vehicle. A vehicle must have a battery with at least 17 kWh’s of storage to qualify for the full credit. This will safely cover any truly electric vehicles as well as most plug-in hybrids, but you should confirm with a dealership.

Another set of requirements have been added to the Clean Vehicle Credit that may impact which vehicles are eligible. The IRA set out a list of standards that manufacturers must meet such as where the vehicle is fully assembled, and where the companies source their “critical minerals” from.

What’s a Tax Credit?

A tax credit is a dollar-for-dollar reduction in the amount you owe in taxes in a given year. This is different from a tax deduction, which reduces your taxable income. The clean energy tax credits associated with the Inflation Reduction Act are non-refundable, meaning you can’t get money back from the government if your credits exceed your tax bill.

However, you can carry forward credits to future years to still get their full value.

What’s a Rebate?

A rebate is a partial or full refund on your purchase after the fact. There are many new rebates in this bill, but most don’t start until Jan 1, 2023.

Most of the rebates in the IRA are intended to be given at the time of purchase. For example, if you buy a new high-efficiency water heater from Lowes or a local plumbing company, they will (ideally) process the rebate when it’s time to pay and you immediately get that money knocked off your total cost.

What’s in the IRA for me?

The IRA marks the reinstatement of the Energy Efficient Home Improvement credit, which had previously expired in 2021. Under this newly revived program, homeowners can receive a 30% tax credit (up to $1,200 per year) for energy efficiency improvements made to their home. This can include things like new energy efficient windows and doors. The new Energy Efficient Home Improvement credit is available until 2033.

The Home Energy Performance-Based Whole House Rebate (HOMES) provides rebates for homeowners who make improvements such as installing insulation and HVAC systems to improve their home’s energy efficiency.

The High-Efficiency Electric Home Rebate Act (HEEHRA) will provide a rebate of up to $14,000 to homeowners who purchase qualifying electric appliances. This can include the purchase of appliances like electric stoves or the installation of a heat pump to replace your furnace. These rebates will begin in 2023.

While the above programs are income-driven (you may not qualify for some rebates if you make over 150% of your area’s median income), the new Clean Energy Credit, previously called the Solar Incentive Tax Credit (ITC), has been bolstered for all Americans. Under this new program, tax credits have increased from 26% to 30% for solar installation projects started after January 1, 2022.

While this doesn’t mean that you can get free solar panels from the government, it allows you to claim tax credits for solar panels, the equipment used to install them, the labor you pay for and the cost of energy storage systems such as backup batteries.

This credit, which was set to expire in 2024, has been extended until 2035. The credit remains at 30% through the end of 2032, then drops to 26% in 2033 and 22% in 2034. If you have questions or want to get started on installing your own system, your local solar installer is the best person to help you calculate your savings.

Inflation Reduction Act Credits and Rebates FAQ