An Ultimate Guide To Solar Tax Credits
You’ve likely heard of solar tax credits if you’re considering adding solar panels to your home or business. Solar tax credits are offered by the federal government to help offset the cost of solar panels for commercial and residential customers across the United States. Although the solar tax credit was due to expire in 2020, federal legislation has extended it through the coronavirus mitigation package as a financial incentive for green energy. This means that it is still a useful and relevant option for anyone considering going solar. Here are the facts about the solar tax credit.
What Is The Solar Tax Credit?
A brief history: The solar credit was established in 2005 to make solar energy affordable for homeowners. It reduces taxes on the purchase and installment of solar energy. The solar investment credit (ITC), was extended up to 2015. Congress then approved the 2016-2019 federal spending bill. It also extended the solar tax credit by retaining the 30% tax credit for taxpayers, if the purchase and installation took place before December 31, 2019.
But, Congress passed an extensive Omnibus Spending Package, $900 Million in Coronavirus Relief, and included a solar credit extension. The new legislation increases the residential solar credit to 26% in 2020-2022 and then drops to 22% by 2023. Unless Congress decides to renew the credit, it will expire in 2024.
The 26% tax credit is available to solar projects in all industries, including residential and commercial. These projects must be built between 2021 and 2022. The tax credit for homeowners will end at 0% in 2024. However, the utility and commercial markets will receive a 10% credit starting in January.
Americans can make the switch to solar energy easy and affordable by taking advantage of the federal solar investment credit. It can be claimed when you file your federal income taxes to cover your solar photovoltaic system, battery storage, and installation costs. The percentage difference depends on the date your system was installed between 2020-2024.
What Can The Solar Tax Do For You?
The installation of solar panels is a major home improvement project. Most people decide to go solar without spending any money upfront. They eventually make significant long-term savings, reducing or eliminating their electricity bill. The average home will save between $10,000 to $20,000 on their solar power system’s lifetime. It can take a few months to get the required approvals and inspections and then to energize the system. But it is well worth it. These are the top reasons to go solar.
A Lower Electricity Bill
You can generate energy free of charge with a solar panel installation Even if you don’t produce 100% of what your home or business needs, your monthly utility consumption will decrease dramatically.
In exchange for credit on their monthly utility bills, solar owners can send their unutilized energy to the grid. Our three service areas (Texas, Colorado, and Florida) all have Net metering is in place throughout the state, with local utility companies.
Increase In Property Value
Solar panels are more likely to sell than homes without them. This means that if you ever sell your house, you will most likely get a higher property valuation.
State Tax Incentives
Certain states offer tax incentives that make solar ownership more affordable. Colorado and Texas law, homeowners won’t have to pay any additional property taxes due to the increase in their home’s value as a result of their solar panel additions.
Who Is Eligible For The ITC?
You may be eligible for the solar investment credit if you meet these criteria:
- Your PV system was installed sometime between January 1, 2006, and today. Or you plan to do so by December 31, 2023.
- Your PV setup will be located in a residential or commercial building within the United States.
- The solar tax credit cannot be claimed if your solar panel system has not been used before.
How Do I Claim Solar Tax Credits?
The solar tax credit is available to anyone who purchases a solar energy system that belongs to their household or business. The solar tax credit can be claimed when you file your federal tax return. Your accountant should know that you have installed solar panels within the last year. If you are filing your taxes yourself, you will use tax form 5695.
Is There An Income Limit For Solar Tax Credits?
There is no income limit to be eligible for the ITC program if you are concerned about your income. You will need to have a large tax liability charge in order to claim your full credit.
Is The Solar Energy Tax Credit Refundable
The ITC is a nonrefundable credit. The Internal Revenue Code provides that credit can be carried forward or retraced for one year.
If you don’t have a tax liability for this year but had one in the past, you can still claim your credit. Or, if your tax liability is not this year but will be at some point in the future, your credit can still be claimed.
ESD Solar Is A Installer You Can Trust
Solar panel installations are a large project. It is important to work with a trustworthy team. ESD Solar will make it easy for our clients to switch to solar energy, no matter if you are a homeowner or a business.
If you are thinking of going solar, and ready to make the switch for a life of green energy, or if you want to reduce your tax burden by decreasing your electric bill, ESD Solar is one of the top solar companies St Petersburg FL.
We will find every financial incentive and practice COVID-19-conscious installations methods. And we’ll offer lifetime service and monitoring to suit your needs! Check out what our customers have to say about how we live up to our promises. Contact us for a no-obligation consultation with one of our energy consultants. Or, if your interest is in learning more about the ITC, contact us today.
Go Solar With ESD Solar
ESD Solar can help you reap the benefits of installing solar panels during an exterior home remodeling. Solar energy is our specialty and we will help you choose the best option for your home.
Call us today for more information about solar panels and the reasons how they should be installed. We can help you determine if solar panels are right for your home and how to incorporate them into your roof design. ESD Solar Company can provide the best solar panels for your home, in Florida, Texas, and Colorado.