The Federal Investment Tax Credit (ITC) available for solar installations can also cover the cost of battery storage. This is not a refund or a rebate. The ITC provides a non-refundable credit you can count towards your federal tax burden worth 30% of the total installation cost of your battery system. You file for the tax credit when you file your taxes for the year the battery was installed. The tax credit is scheduled to decline to 26% in 2020, 22% in 2021, 10% in 2022, and sunset after that.
There are strict specifications for eligibility based on how much the battery system is charged by solar. According to the IRS, a battery system must be 100% charged by solar energy (i.e. the solar panels it’s connected to) in order to qualify for the full 30% tax credit. For battery systems that aren’t fully 100% charged from solar energy but meet a minimum threshold of 75% solar charge, a portion of the 30% tax credit is available (as calculated by the IRS). If your battery is less than 75% charged from solar energy, it is ineligible for the tax credit. See our Battery Storage Guide for more information.
Some states and jurisdictions are also beginning to offer incentives. Maryland, for example, offers a 30% state tax credit off of the cost of battery storage with a maximum credit of $5,000 for residential systems.