On August 18, 2022, the Inflation Reduction Act (IRA) instated the largest clean energy investment in United States history.
Including $370 billion set aside for renewable power and climate change programs, the IRA incentivizes emission-free electricity generation, storage, and energy-efficiency improvements for homeowners, businesses, and other domestic organizations.
In other words, solar power and electricity storage will continue to become affordable and accessible in the United States with federal tax credits designed to accelerate the renewable energy industry.
Solar Energy and the Inflation Reduction Act of 2022
The Inflation Reduction Act represents a momentous extension of solar tax credits for renewable energy system owners. It also introduces several new investments for clean energy manufacturing and industry advancement.
Investment Tax Credit (ITC) in 2026
First enacted in 2006, the federal Investment Tax Credit (ITC) helped drive more than 10,000% growth in the U.S. solar industry. While the Inflation Reduction Act of 2022 (IRA) expanded clean energy incentives, changes that took effect after 2025 significantly altered how the ITC applies in 2026.
Solar Investment Tax Credit
The ITC allows eligible project owners to claim a federal tax credit based on a percentage of total system costs, including equipment, labor, permitting, and installation. As of 2026, the Residential Clean Energy Credit has expired. Homeowner-owned solar systems placed in service in 2026 are no longer eligible for a federal ITC unless new legislation is enacted.
The ITC remains available for commercial and utility-scale solar projects. Qualifying projects may claim up to 30%, provided they meet prevailing wage and apprenticeship requirements. Under current law, the commercial ITC stays at 30% through 2032, steps down to 26% in 2033, and 22% in 2034 before expiring.
Standalone energy storage
The IRA created a standalone energy storage tax credit, allowing batteries to qualify without being paired with solar. For residential systems, the storage credit expired alongside the residential solar credit at the end of 2025. Homeowners installing batteries in 2026 are not eligible for a federal tax credit.
For commercial projects, standalone energy storage systems remain eligible in 2026. Systems typically must meet a minimum capacity threshold (commonly 5 kWh or greater) and comply with labor requirements to receive the full 30% credit. Storage systems do not need to be charged by solar to qualify.
Clean energy jobs and industry growth
In addition to the extended tax credits for solar and storage ownership, the Inflation Reduction Act will invest more than $60 billion in domestic clean energy manufacturing. This includes a $10 billion investment in clean energy system production, for technologies such as solar panels, wind turbines, and electric vehicles, as well as a $2 billion investment to accelerate renewable power research.
Energy efficiency and home improvement tax incentives
Besides going solar, home and property owners can also benefit from the Inflation Reduction Act by improving their home’s energy efficiency. The bill allows homeowners to claim up to $1,200 annually with home improvement tax incentives for upgrades such as smart electricity management systems, appliance efficiency improvements, and new windows or doors.
Within this $1,200 window, there are a few specific limits on what can be claimed for individual home energy efficiency tax credits. For instance, homeowners can claim up to $150 on a home energy audit or $600 on a main electric panel upgrade. Separately, homeowners can also receive tax credits up to $2,000 on full-home improvements such as electric heat pumps and electric hot water pumps.
Electric vehicles and charging stations
To encourage investment in electric transportation, the IRA has extended the Clean Vehicle Tax Credit through 2032. Using the Clean Vehicle Tax Credit, qualified individuals and businesses can claim up to $7,500 after the purchase of a new electric vehicle. The Inflation Reduction Act also creates a Previously Owned Clean Vehicle Credit of up to $4,000 on used electric vehicles.
In support of EV adoption, the IRA also extends the Alternative Fuel Vehicle (AFV) Refueling Property Credit for Electric Vehicle Supply Equipment (EVSE) installed before 2032. Offered at 30% of total purchase and installation costs, the AFV Refueling Property credit can be claimed by homeowners and businesses on the parts and supporting expenses for AC (alternating current) and DC (direct current) charging stations.
Want an estimate of how much solar will cost you? Check out the Enphase System Planner, which allows you to customize the optimal system for your home’s needs.
