In a surprise victory for the solar and clean technology industries, Senator Joe Manchin and Democrats reached an agreement on a reconciliation bill, dubbed the Inflation Reduction Act of 2022. The bill includes $370 billion in spending for renewable energy and climate measures.

One of the most impactful provisions in the bill, which can be read in full text here, is the long-term extension of the Investment Tax Credit, which has been instrumental in launching the solar industry we know today. The bill calls for a 10-year extension at 30% of the cost of the installed equipment, which will then step down to 26% in 2033 and 22% in 2034.

The tax credit applies to residential adopters of solar technology. Now that the bill has passed, the 30% credit will be retroactively applied to anyone who installed their system since the beginning of 2022.

The 30% credit also applies to energy storage whether it is co-located or installed as standalone energy storage. This enables the retrofit of a battery to a solar array while taking advantage of the credit.