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Opus 17
Level 15

[FAQ] Revisions to section 25D Residential Clean Energy Credit

Decided to suss this one out too. 

 

Revisions to section 25D Residential Clean Energy Credit

 

  1. Changes the name of the credit from Residential Energy Efficient Property Credit to the Residential Clean Energy Credit.
  2. The credit is extended through December 31, 2034.
  3. The phase-out schedule is changed. The credit percentage is 30% for property placed in service after December 31, 2021, and before January 1, 2033; 26% for property placed in service after December 31, 2032, and before January 1, 2034, and 22% for property placed in service after December 31, 2033, and before January 1, 2035.
  4. The credit for qualified biomass fuel property is removed from section 25D because it has been added to section 25C.
  5. Adds a credit for qualified battery storage technology expenditures as long as the storage capacity is 3 kWh or greater.

 

The change to the phase-out schedule is effective immediately (30% credit for property installed in 2022). The battery storage credit applies to property installed after December 31, 2022.

 

Source: 

https://www.democrats.senate.gov/imo/media/doc/inflation_reduction_act_of_2022.pdf

Pages 351-353

Cross-checked with the most recent version here.

PDF (712KB)

Subject to change because it has not been signed by the President yet. 

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
7 Replies
Bsch4477
Level 15

[FAQ] Revisions to section 25D Residential Clean Energy Credit

Both posts very helpful. Thanks. 

NCperson
Level 15

[FAQ] Revisions to section 25D Residential Clean Energy Credit

@Opus 17 yes, both posts were very helpful.... will we see one for EV🤔 ? 

Opus 17
Level 15

[FAQ] Revisions to section 25D Residential Clean Energy Credit

💵💰💰💰💰???

 

(problem is, I was already familiar with 25C and 25D.  I’ve managed to never learn much about the EV credit so it would be harder to put changes in context)

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
Bsch4477
Level 15

[FAQ] Revisions to section 25D Residential Clean Energy Credit

laurayoung411
Returning Member

[FAQ] Revisions to section 25D Residential Clean Energy Credit

I would like to install new windows and solar panels. It looks like windows are covered under 25C and would be capped at  30%, but the max is $600 per year. If that's true it would only cover 30% of one or two windows... Solar Panels appear to be covered under 25D and capped at 30%... Is there also a yearly/lifetime max? Thanks!

Opus 17
Level 15

[FAQ] Revisions to section 25D Residential Clean Energy Credit


@laurayoung411 wrote:

I would like to install new windows and solar panels. It looks like windows are covered under 25C and would be capped at  30%, but the max is $600 per year. If that's true it would only cover 30% of one or two windows... Solar Panels appear to be covered under 25D and capped at 30%... Is there also a yearly/lifetime max? Thanks!


Windows are in section 25C.  For 2022, the credit is 10% of the cost up to $200.  Starting in 2023, the credit is 30% of the cost up to a $600 annual maximum.  Suppose doing all your windows would cost $4000.  If you spend $4000 in 2023, your credit is $600.  If you did half the windows in 2023 and half in 2024 for $2000 each year, you could claim a $600 credit in both years.  But the credit is claimed when the windows are installed, not when they are paid for.  You would actually have to spread the installations over time to claim the credit in more than 1 year, not just spread out the payments. 

 

Solar electric is covered in section 25D.  The credit is 30% of the cost, and is claimed on the date the panels are placed in service (installed, inspected and turned on) regardless of when you pay for them.  Normally, you claim your system in the year it is installed.  However, if you come back in the future to install more panels and make your system more powerful, you could claim a credit for the new part of the system in the year it was placed in service. 

 

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
SweetieJean
Level 15

[FAQ] Revisions to section 25D Residential Clean Energy Credit

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