FEDERAL TAX CREDIT
The federal government’s renewable energy incentive program is still in full force! This means that you can effectively reduce the cost of your solar install by thousands of dollars through tax credits. But this program won’t be available forever. In fact, if it wasn’t for an extension passed by Congress in 2007 it would already by gone! 2019 is the last year to get full advantage of this program. It will still be around in 2020, but it won’t be as good as it is now. Read on to see why.
WHAT IS THE SOLAR TAX CREDIT?
The federal solar tax credit, also known as the investment tax credit (ITC), allows you to deduct up to 30% of the cost of installing a solar energy system from your federal taxes. This applies both to residential and commercial systems and there is no cap on its value! But 2019 is the last year to claim up to 30% of the system cost. In 2020 this drops to 26%, in 2021 it drops to 22%, and then it will be gone for residential systems. 2022 and onward will only have a 10% credit for commercial systems only.
DO I QUALIFY FOR THE SOLAR TAX CREDIT?
As long as you own your system you are eligible for the federal tax credit! Even if you don’t have enough tax liability in one year to claim the entire credit you can “roll over” the remaining credits into future years as long as the tax credit is still in effect. Remember, if you decide to do a PPA or solar lease you do not own the system, as thus are not eligible for the tax credit. Be sure to talk to a tax professional to see if you have enough tax liability to take advantage of this program. If you do, remember to tell a tax professional and they can help you claim the credit after you go solar.*
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*Select Solar Professionals does not offer any tax advice with the above article and urges clients and readers to consult with a tax professional for questions and advice pertaining to the Federal Solar Tax Credit (ITC) and any other tax related questions.