Why the Solar Investment Tax Credit Is Essential for Iowa’s Energy Future.

Congress May Cut Tax Benefits for Solar Users. Here’s Why We Need To Keep Them.

Families across the country are unlocking the savings of solar energy, thanks in large part to a federal tax credit that has made solar more affordable for decades. However, a bill in Congress is now positioned to do away with this tax credit — 10 years before its scheduled end date.

At 1 Source Solar, we see firsthand how the solar Investment Tax Credit benefits families, business owners, and farmers across the Midwest. We also know the news can spark questions about what the cuts could mean for you. That’s especially true if you’ve recently installed solar panels or are thinking about doing it soon.

The bottom line is that, unfortunately, ending the solar tax credit would mean higher solar costs, energy rate hikes, and hundreds of lost jobs across Iowa and the Midwest. 

We’re urging Midwesterners to contact their U.S. senators to let them know our country needs to keep the credit in place. Here’s what you should know about the legislation, how it could affect you, and how to take action.

What Is the Federal Solar Investment Tax Credit?

The U.S. government put the first solar Investment Tax Credit into place in 2006 and has continued renewing it for the past two decades.

The tax credit received a large boost in 2022 when the passage of the Inflation Reduction Act dramatically expanded it. Homeowners and businesses now receive a dollar-for-dollar credit on their taxes equal to 30% of the cost of new solar panel systems, storage devices, and installation expenses. The tax credit is set to apply to new solar panels installed between 2022 and 2032. It will then gradually phase out, dropping to 26% in 2033, 22% in 2034, and 0% in 2035.

Since the first passage of the solar Investment Tax Credit, solar construction has spiked in the Midwest and across the country. As a result, more homeowners, businesses, and farmers have had access to the clean energy and cost savings it provides. According to the Solar Energy Industry Association, the U.S. solar industry has grown 200 times larger since 2006.

How the New Bill Would Change the Solar Investment Tax Credit 

This tax credit is now in jeopardy due to a sweeping spending package passed by the House of Representatives. The bill, informally known as the “Big, Beautiful Bill” includes many tax cuts and spending reductions.

In the form passed by the House, the bill would prove devastating for solar customers and the industry at large. It would dramatically shorten the timeline for receiving solar tax credits, with these key changes:

• The federal 30% tax credit for residential solar users would expire after Dec. 31 of this year.
• For commercial solar users and other utility-scale projects, projects would need to begin construction within 60 days of the bill’s enactment. They would also need to go online by Dec. 31, 2028 — an impossibly tight window. 
• Companies offering solar leases or power purchase agreements wouldn’t be able to collect the tax credit for residential systems.

Recently proposed revisions in the Senate could potentially cut solar benefits further. The bill is now in the Senate and could see further changes in the coming days. The Senate is expected to vote on the bill soon.

What Happens if the Solar Investment Tax Credit Goes Away?

Ending the solar Investment Tax Credit early would be devastating for not only solar consumers but also energy users at large. Here are some of the effects it would have:  

• More Expensive Solar Costs. Solar panels installed after December 31, 2025, would see a 30% increase in cost for homeowners, lowering their cost savings and lengthening their payback period.
• Job Losses. Clean energy tax credits support more than 2,300 jobs and generate more than $116 million in wages annually in Iowa, according to a study commissioned by the Nature Conservancy.
• Higher Energy Bills. Energy bills for families and businesses would increase 7 to 10% in 2026, according to a national projection released by the Clean Energy Buyers Association.

How the Solar Investment Tax Credit Is Helping Iowans

The 30% solar Investment Tax Credit is making projects accessible for people across the country. It’s the main tax benefit available in Iowa, Missouri, Illinois, and other states to make solar affordable.

Across the Midwest, we have seen firsthand how this tax credit has made solar projects possible. Some of our recent projects include:

• Rooftop solar panels at a residential home in Adel, Iowa, that will offset 100% of the home’s energy usage. With the 30% tax credit, the panels will be paid for within eight years. 
• A 208 solar module project at a farm in Downing, Missouri, that will offset over 94% of the farm’s energy usage. The 30% tax credit, along with other benefits, will help it pay for itself within 2 ½ years. 
• A 2.7MW project at the Vermeer Global Parts Distribution Center in Pella, Iowa, that will have a payback period of under six years, with a return on investment of over 17%. 

Explore more of our recent solar projects in our gallery to see how much other clients have saved. 

Have Questions? Want To Know How To Help? Here’s What To Do.

At 1 Source Solar, we know the difference this tax credit makes for families, small business owners, farmers, and many more solar users across the Midwest and the country. That’s why we’re passionate about keeping it in place to continue to give people access to affordable clean energy.

We encourage Iowans and others across the Midwest to let lawmakers know about the importance of the solar Investment Tax Credit to our communities. You can find your U.S. senators here to contact their offices today.

At the same time, we are prepared to help solar users navigate the industry, no matter how uncertain it may be or what changes occur. If you have questions about the legislation or how it might affect your solar project with us, please contact our office. We will be happy to answer any questions.