The recent version of the tax and spending bill passed by the House eliminates the 30% tax credit for solar and other clean energy technology.

The US House of Representatives just passed a bill that would end clean energy tax credits for technologies such as wind, solar, and battery storage. Only projects that begin construction within 60 days of the bill’s passing would still be eligible for credits. The Senate will take up the bill next and, while there’s no way to know what will change once it goes to the Senate, the clear message is that clean energy tax credits are not guaranteed. Even if the Senate brings back the tax credits, they could still be eliminated in the next few years, which may effectively kill off the rooftop solar industry. If you have been thinking about solar, now is the time to act–before you lose out on those tax credits.

The federal solar tax credit, referred to as the Investment Tax Credit (ITC), is the most well-known financial incentive for homeowners to install solar. Thanks to the Inflation Reduction Act, passed in 2022, the ITC in 2025 is 30%, meaning that 30% of the cost of a solar photovoltaic (PV) system can be claimed on federal income taxes. This is a dollar-for-dollar reduction on your income tax. This credit also applies to energy storage in the form of batteries.  

The average Vermont homeowner needs a 10-11 kW solar panel system to power their home and cover all their electricity needs, though this obviously depends on how much electricity you use. Other factors may limit the size of your array, including the angle and direction of your roof and how much shade it gets. If you choose a ground-mounted solar array, it will likely be easier to find a sunny location that can accommodate the number of panels you need. Installers can look at your home’s energy usage and consider options for siting the panels.

The price for a 10-11 kW solar panel system in Vermont is between $27,757 and $37,553. If your system was going to cost $32,655 and you used the 30% federal tax credit, you would receive $9,797 back in income tax. Your final price post-credit would be $22,859. Smaller systems cost less–a 5 kW system will only cost you $14,873–but won’t get you as many credits back on your electricity bill. The current tax credit carriers over, so if you don’t earn enough income in one year to use it all then you can continue to deduct the remaining amount from your income in the next year. If you cannot pay out of pocket for solar, you can take out a solar loan, which is similar to financing a car or paying a mortgage. 

Stepping back, what could this bill mean for the future of clean energy in the United States? If these measures in the house bill are carried forward by the senate, they would have a sweeping, destructive impact on clean energy. The REPEAT Project (Rapid Energy Policy Evaluation and Toolkit) has found that the current bill would:

• Increase U.S. greenhouse gas emissions by roughly 0.5 billion metric tons per year in 2030 and more than 1 billion metric tons per year in 2035.
• Raise U.S. household and business energy expenditures by 25 billion USD annually in 2030 and over 50 billion USD in 2035.
• Increase average U.S. household energy costs by roughly 100 to 160 dollars per household per year in 2030 roughly 270 to 415 dollars per household per year in 2035.
• Reduces cumulative capital investment in U.S. electricity and clean fuels production by 1 trillion dollars from 2025-2035.
• Imperil a total of 522 billion dollars in announced but pending investments in U.S. clean energy supply and manufacturing.
• Reduce annual sales of electric vehicles by roughly 40% in 2030 and end America’s battery manufacturing boom.
• Substantially slow electricity capacity additions, raising national average retail electricity rates and monthly household electricity bills by about 9% in 2030 — and as much as 17% in some states (including TX, OK and PA). 

This bill is a blow to clean energy as we know it. If you can act now to install solar, take advantage of the 30% tax credit while it is still available. If not, speak up and spread the word about what this will mean for greenhouse gas emissions, and for people’s wallets, in the years to come.