The Federal Solar Tax Credit
Solar energy is taking over the market, and Florida is one of the best states for it as well! The only downside to these amazing systems is the upfront cost. However, a large amount of this can be claimed back via a federal tax credit incentive aimed at pushing solar! If you’re spending up to $10,000 on your system you could owe up to $2600 less in taxes the following year. It is important to consider that the federal solar tax credit will be expiring in 2022 so you will need to act fast in order to get access to federal money for your solar installation.
What Is The Federal Solar Tax Credit?
The solar investment tax credit, also called the investment tax credit, or ITC for short, was first offered through the Energy Policy Act of 2005. It’s been a popular program towards reaching the renewable energy goals across the United States and the ITC has been extended with extra funding several times. The first ITC benefits were set to expire in 2007 and since then the federal solar tax credit extension has been mandated to expire in 2022. There’s no word yet as to whether or not the program will be extended again but it’s quite likely that this will be the end of federal funding for solar tax credits with the popularity of the program.
Homeowners can use a series of other credits as well including the federal tax credit for battery storage when installing new systems and for upgrading their solar power systems too. When you install a solar power system the federal government will be able to issue a tax credit of up to 26% of the total cost of your project. This will instantly provide you with a huge improvement to your payback and a break on your home taxes for the year as well. The tax credit is provided as a reduction to the income tax that you all for making improvements to your home. If you spend $10,000 on your system, you will owe $2600 less than the taxes you would spend on your property for the following year.
This tax credit also works differently than a refund because you will have to have owed taxes in order to claim the incentive. As most people end up owing property taxes it’s easy to come eligible for the federal solar tax credit.
How Can I Make a Claim?
You will only be eligible to make a claim if you own your system and this is why many installers will advocate away from the idea of solar leasing if you can’t afford to finance a system. The company leases you a system they will continue to own the equipment and they will be able to make the claim for your installation. You’ll be able to get access to cheap and renewable energy and the tax credit if you choose to finance your solar system rather than lease. Buying your system is one of the best ways that you can see a positive return on investment route the process of your solar system.
The Amount That You Can Claim is Decreasing Each Year
The tax credit steps down in value over the next few years and it’s set to disappear completely in 2022. The value of the federal tax credit is 26% now and will be reducing the 22% in 2021. By 2022 you’ll only be able to claim 10% in value in order to manage the costs of commercial projects.
If you claim credit this year, it’s not too late to take advantage of the maximum tax credits that you’ll be able to receive for installing a solar system. Working with an experienced installer is one of the best ways to get your project underway as soon as possible. Contact our team today and we can help you get access to the maximum amount of federal tax credits for your solar installation!