Homeowners Race to Cash In on Expiring Green Energy Tax Credits

John and Sarah Thompson are in a rush to go green. The Seattle couple is scrambling to install solar panels on their home and buy an electric vehicle before generous federal tax breaks phase out over the next few years.

“We’ve been thinking about solar and an EV for a while, but the tax credits finally pushed us over the edge,” says John, a 42-year-old software engineer. “It’s now or never if we want to maximize the savings.”

The Thompsons are far from alone. Across the country, homeowners are racing to take advantage of lucrative incentives for clean energy upgrades before time runs out.

Solar Installations Surge

The Inflation Reduction Act, passed last year, extended a 30% tax credit for solar installations through 2032. But the credit drops to 26% in 2033 and 22% in 2034 before expiring completely.

That’s fueling a boom in residential solar. Installations jumped 21% in the first quarter of 2023 compared to a year earlier, according to the Solar Energy Industries Association.

“Our phones are ringing off the hook,” says Lisa Chen, owner of Sunny Days Solar in Phoenix. “Homeowners know the clock is ticking on these tax breaks, and they don’t want to miss out.”

EVs Flying Off Lots

It’s a similar story for electric vehicles. The Inflation Reduction Act created a new $7,500 tax credit for EVs, but with strict price and sourcing requirements set to phase in over the next few years.

Analysts predict EV sales will spike 37% in 2023 as buyers aim to snag the full credit before the rules tighten. “I wasn’t planning to replace my car this soon, but the tax credit made it a no-brainer,” says Jessica Nguyen, who just bought a Tesla Model 3 in Houston.

A Shrinking Window

Tax experts warn that homeowners have limited time to maximize these incentives. “If you’re on the fence about going green, now is the time to act,” advises CPA Michael Thompson of New York. “Once these credits start phasing out, they’re gone for good.”

That urgency is not lost on the Thompsons in Seattle. They’re already shopping for an EV to park next to their soon-to-be solar-powered home.

“We figure we can save over $20,000 between the car and solar credits,” John says. “We’d be crazy not to take advantage while we still can.”

As the green energy deadline looms, the race to cash in on these incentives may just be getting started. Homeowners who hesitate could find themselves watching those enticing tax breaks sail off into the sunset.

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