Incentives

Residential Clean Energy Credit

Beginning in 2023, the final cost of buying and installing a large battery for home energy storage could be 30% lower, even if you don't own solar panels. With the new Residential Clean Energy Tax Credit, simply buying a home energy storage system and installing it in your home is enough to qualify. There is no limit to the tax credit, no income requirement, and if the credit amount is more than your tax bill, you can use the rest of it to offset your tax bill for later years.


Tax Credits

A tax credit is a dollar-for-dollar reduction in the amount of tax you owe. Unlike a tax deduction, which only lowers your taxable income, a tax credit directly reduces the amount of tax you owe. For example, if your tax bill for the year is $10,000 and you have a $3,000 tax credit, you only have to pay $7,000 in taxes. If you had $10,000 withheld from your paycheck, you would get a $3,000 refund.

Eligibility

To be eligible for the tax credit, you must buy a new battery that stores at least 3kWh of energy, and that battery must be installed in a residence where you live. The residence can be an existing home or new construction. It can be your primary residence, but it can also be a vacation home. If you install your battery in a vacation home, the tax credit may require some adjustments based on the amount of time you spend there.

You do not need to own solar panels, wind turbines, or any other equipment that generates energy to get a tax credit for batteries. Your energy storage system could simply connect to the grid and be used to store energy for power failures, charge an electric vehicle, or reduce your draw from the grid during peak hours. Of course, you can have solar panels and still get a tax credit for your batteries, but solar panels or other equipment are not required.

In addition to a single family homes, houseboats, mobile homes, co-ops, condos, and manufactured homes also qualify. Businesses or rental properties you own but do not live in do not qualify for this tax credit, but may qualify for other credits.

No Income Requirements

There are no income requirements. As long as you have enough taxable income that you are required to pay federal taxes, you can use this tax credit to reduce the amount of taxes you pay.

No limit

There is no lifetime limit to the tax credit. Even if you also received a tax credit for installing solar panels, wind turbines, purchasing an EV, or any other clean energy improvement, you can still take a tax credit for 30% of the cost of buying and installing batteries. Taking a tax credit one year also doesn't affect your future eligibility. You can start your energy storage system now, receive a tax credit, and then add to it next year and get a tax credit for those batteries as well.

Save it for later

If your total tax credit is more than your tax bill, you can apply any remaining credit to later tax years. This is called carrying forward, and makes this tax credit particularly valuable.

Nonrefundable and Refundable Tax Credits

Different tax credits can have different rules about how they relate to a tax refund. This can be a little bit confusing, so lets walk through it step by step.

The Residential Clean Energy Credit is not refundable. That is confusing language. Many people think it means that they won't be able to take advantage of this tax credit if they usually get a refund after filing their taxes. But you can take advantage of this tax credit if you're expecting a refund. You just can't get more refunded than you paid in during the year. If, like most taxpayers, you have money withheld from each paycheck, or, if you make estimated payments quarterly, all of those payments can be refunded.

Here is an example. Lets say you have $12,000 withheld from your paycheck in 2023. Normally you would get a refund of $2,000. But this year you invested $6000 in a home energy storage system, including installation and labor costs. Because you bought new batteries and had them installed in your home in 2023, you are eligible for a 30% tax credit. Instead of receiving your typical refund of $2000, you would get the usual $2000 plus an additional $1800, making your total refund $3800. Because $3800 is less than the $12,000 you had witheld from your paycheck over the year, you can get refunded the entire amount of your tax credit.

Now, lets imagine the same situation, except you had an additional $9000 in tax credits for other reasons. In that case, you get the $2000 you usually would get refunded, plus the $9000, and you could get an additional $1000 from the tax credit for your home energy storage system. In this case, your refund is $12,000, the entire amount that was withheld from your paycheck during the year. However, you can carry forward the additional $800 to the 2024 tax year. The ability to carry forward the Residential Clean Energy Credit is one of the reasons this is such a valuable tax credit. If you happen to have a year with a low tax bill, you can still get your full tax credit. You just carry forward the tax credit from batteries you buy this year and use it on next years taxes!

Tax Reminders

We want you to use your tax credits! If you buy a DBCPower battery, we will send you a reminder during tax season, along with copies documenting your qualifying purchases to help you get your full tax credit!