Tax Incentives
Current Legislation
Investment Tax Credit
The ITC is currently a 30 percent tax credit for solar systems on residential buildings (Section 25D of the Internal Revenue Code) and commercial properties (Section 48). The residential tax credit expires on December 31st, 2025, while the commercial solar tax credit remains in effect. The Section 48 commercial credit CAN be applied to both customer-sited commercial solar systems and large-scale utility solar farms.
Domestic content Bonus Tax Credit
Domestic Content 10 Percent Bonus Guidance Released – (IRS Notice 2023-38) The Inflation Reduction Act of 2022 (IRA) created a 10 percent tax credit adder to encourage the use of “domestic content” in renewable projects that qualify for the production tax credit (PTC) and investment tax credit (ITC).
Energy Community Bonus Tax Credit
MACRS Depreciation deduction
Rural Energy for America Program (REAP)
With the passage of the Inflation Reduction Act, the Rural Energy for America Program (REAP) has been provided over $2 billion for renewable energy systems and energy efficiency improvement grants for agricultural producers and rural small business owners through 2031.
Program Objective REAP offers guaranteed loan financing and grant funding to agricultural producers, rural small for-profit businesses, co-ops, and tribal businesses. The program aims to support the purchase or installation of renewable energy systems (RES) and energy efficiency improvements (EEI) projects.
Grant Funding Highlights REAP grants cover up to 25 percent or 50 percent of total eligible project costs. Grant awards range from $1,500 to $500,000 for EEI projects, and $2,500 to $1,000,000 for RES projects.
Loan Guarantees REAP guaranteed loans are provided through lending institutions. These loans can finance up to 75 percent of a project’s total eligible costs with an 80 percent guarantee.
Non-profit direct payment ITC
Nonprofits can now benefit from the Investment, not only those that have tax liability. Nonprofits and other tax-exempt entities — like municipalities and Tribal governments — are eligible to receive the ITC in the form of a direct pay reimbursement. This also includes the domestic content and energy community adders.
Idaho Solar Energy Tax Credit
This allows payers to save up to 40 percent of the cost of their home’s solar, wind, and geothermal power installations (not to exceed $20,000 with $5,000 max per year). This 40 percent deduction will be applied the year you purchase and install your photovoltaic system, but you can save an additional 20 percent for the three years following.
Interested in learning more about current and future tax incentives in Idaho? Check out the Database of State Incentives for Renewables and Efficiency at dsireusa.org.