How the Big Beautiful Bill Impacts Solar & EV Tax Credits, #262

Tax Planning
Written By Ryan Morrissey

With the recent passage of the Inflation Reduction Act, also known as the Big Beautiful Bill, significant changes are coming to both solar panel and electric vehicle tax credits. 

I break down what these changes mean, how they can affect your savings, and what steps you might want to take before these credits disappear. 

From figuring out if solar panels make sense for your home to understanding how electric vehicle credits work (and when they’re expiring), this episode is packed with actionable insights and tips, especially for those planning for retirement or looking to cut down on monthly expenses.

You will want to hear this episode if you are interested in...

  • [01:31] Residential solar panels are popular for reducing electric bills, offering significant savings, especially for retirees.

  • [05:23] Solar tax credits are expiring soon.

  • [09:07] Solar investments offset electric costs and protect against future rate hikes, beneficial long term.

  • [11:28] Costs and break-even of electric cars.

  • [13:08] Act now if you want to take advantage of solar tax credits.

The Solar Panel Tax Credit is a Fading Opportunity

One of the biggest draws for homeowners considering solar panels has been the significant federal tax credit, currently set at 30% of the total installation cost.

This credit has made solar an appealing investment for many, offering a direct dollar-for-dollar reduction in the taxes owed. In high-cost electricity states like Connecticut, this can mean hundreds of dollars in monthly savings on your utility bill.

However, the Big Beautiful Bill brings an unfortunate change: the solar tax credit is set to disappear at the end of this year. That means if you’ve been thinking about going solar, now is the time to act.

If you don’t install solar panels before the deadline could add years to your payback period, undermining the investment’s attractiveness and putting it out of reach for many.

Energy Savings of Battery Storage and EVs

While solar panels are great for energy savings, adding a battery storage system further enhances their benefits. A battery can store excess solar power for use during peak times or outages, which is particularly helpful for retirees planning to stay in their homes for decades and looking to insulate themselves from rising electricity rates.

Electric vehicles (EVs) also offer savings for households with high transportation costs. The federal EV tax credit, worth up to $7,500 on new cars and up to $4,000 for used EVs, has also been a strong motivator for those considering a switch from gas-powered vehicles.

The Big Beautiful Bill also changes the EV tax credit, which will disappear even sooner than the solar incentive. Although there are several important limitations: only vehicles assembled in North America qualify, and there’s a cap on purchase price ($55,000 for sedans, $80,000 for SUVs).

Income limitations apply as well; single filers must earn less than $150,000 ($300,000 for married couples) to claim the new vehicle credit. The used EV credit comes with lower income caps ($75,000 for singles, $150,000 for couples) and is worth up to $4,000. 

Should You Act Now? 

Before making any big investment, think about the following:

  • Timing: Both solar and EV credits will soon vanish. If you want the tax break, don’t wait.

  • Financial Health: The best return comes from paying cash, not financing or tapping retirement accounts.

  • Long-term Plans: Solar and EV investments make the most sense if you plan to stay in your home and keep your vehicle for years to come.

Manufacturers may eventually lower prices as credits disappear, but there are no guarantees.

With energy incentives set to change dramatically, the window to maximize savings is closing fast. For homeowners and future retirees, the time to act is now, whether that means installing solar, purchasing an EV, or both.

Consult with a financial advisor to consider how these decisions fit into your overall retirement and financial readiness strategy.

The Treasury Department’s official list of eligible vehicles shows that the cars, trucks, minivans, and SUVs listed below qualify for a full $7,500 tax credit if placed in service between January 1 and September 30 of 2025.

In some cases, only certain trim levels or model years qualify. More vehicles may be added to or removed from this list as manufacturers continue to submit information on whether their vehicles are eligible.

Resources Mentioned

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Risk and Reward of Withdrawing Social Security Benefits to Invest Them, #261