Maryland has become the first state in the country to offer an income tax credit for energy storage systems, making going green even cheaper for homeowners! The Tax Year 2018 Energy Storage Tax Credit Program, which launched in January 2018, is offered on a first come first serve basis through 2020. Residents who purchase and install energy storage systems can earn up to $5,000 in state income tax credit. Read on to learn more about claiming this incentive!
How to Qualify for Maryland's 2018 Energy Storage Tax Credit
To take advantage of the Energy Storage Tax Credit Program, homeowners must install the battery at their primary residence during the 2018 tax year (January 1, 2018 to December 31, 2018). Any unused portion of the credit may not be carried over to the next taxable year. Residential participants can receive the lesser of either $5,000 or 30% of the total cost of purchasing and installing a battery while funding is available.
IMPORTANT DISCLAIMER: As with any tax decision, please consult your CPA or tax advisor before filing. This article has been prepared for informational purposes only.
Example of the Maryland Battery Credit
The 9.8 kWh LG Chem RESU 10 battery pictured at below starts at about $10,000. Though installation fees range, we’ll assume that a professional charges $2,000, which brings the total cost to $12,000. Maryland’s pilot program would thus issue a tax credit for $3,600, bringing down the net cost to $8,400.
Battery Cost Breakdown
Here's the total cost of the installed home battery system:
$10,000 = Battery Cost
+$2,000 = Installation Fee
= $12,000 = Gross System Installed Cost
Next, we'll determine the energy storage tax credit amount:
x30% = Tax Credit Rate
$3,600 = Income Tax Credit (Because this amount is less the $5,000 maximum, this is the determined credit)
Therefore, the net cost to the homeowner is:
$8,400 = Net System Cost
Additional Home Battery Incentives are Available
Even better, homeowners installing a solar system and battery at the same time may be eligible for the Federal Income Tax Credit - an additional 30% off the cost and installation of a home energy storage and solar system. Read more about claiming the Federal Income Tax Credit on a home battery here.
The Finer Details: Residential and Commercial Breakdown
The Maryland Energy Administration (MEA) has allocated a total of $750,000 to this pilot program. $225,000 is reserved for residential taxpayers, while the remaining $525,000 will be offered to commercial participants that install onsite energy storage.
Here's what happens if the residential tax credit claims reach the $225,000 maximum:
- If the entire $225,000 residential budget is allotted to eligible participants, new residential program applicants will be wait-listed.
- If funding remains in the commercial sector of the program by October 1, 2018, wait-listed residential Marylanders will be given income tax credits from the commercial budget. However, if the entirety of the program’s budget is used, wait-listed candidates will no longer be considered.
Eligible taxpayers looking into storage systems should act quickly before the funds are completely distributed!
To find out if buying a battery is the right decision for you or learn more about going solar in Maryland, reach out to one of our energy experts today! Subscribe to our blog to stay updated on the latest industry trends, technological breakthroughs, and energy incentives.