The Investment Tax Credit (ITC) is a federal tax incentive for business or residential investment in renewable energy generation systems that can be applied to solar installations. The ITC lets individuals or businesses deduct a certain percentage of their installation costs from any tax liability they have. This credit is in addition to normal allowances for asset depreciation. It only works if the entity that makes the investment is a taxable entity and has sufficient tax liability. As of the passage of the Inflation Reduction Act in August 2022, the ITC provides a credit valued at 30% of the cost of installation. It is set to reduce in value after 2032. The basis for the 30% now includes not just the installation and equipment associated with a solar array, but can include interconnection costs, as well as battery storage costs and more. If you are developing a community solar project and are not familiar with the ITC rules and process, consult a tax attorney.