The United States federal government subsidizes the purchase and installation of solar energy systems with a general solar tax credit. The federal solar tax credit is available to both residential homeowners and commercial businesses. It significantly reduces the payback time for solar power investments.
The federal solar tax credit is also called the solar investment tax credit. The Energy Policy Act brought it to life in 2005. While this tax credit was originally supposed to end in 2007, the popularity of the program is keeping it going through 2021. Even though it has been extended, the terms of the credit are not the same year to year.
How much is the Solar Tax Credit?
Right now through 2019, the tax credit is and will remain at 30% of the solar panel and installation expense. For 2020, the credit will reduce from 30% to 26%. In 2021, this incentive will dive even lower to 22%. After 2021, the residential solar tax credit is slated to fully expire and only a smaller 10% credit will be available for commercial solar energy systems from 2022 into the future. This credit schedule has been modified by Congress in the past and could be extended or curtailed by future legislative actions. To read more about the renewable energy tax credit visit this link.
Am I Eligible for the 30% Federal Tax Credit?
Eligibility for the solar tax credit is fairly simple, although there are a few things to look out for. To be eligible for the solar tax credit as a homeowner, you need to be the purchaser and owner of the solar energy system you are buying and installing. Solar panels must be installed on a home you own and use as a residence (no rentals, but second homes qualify) between January 1, 2009 and December 31, 2021. If you lease the solar panel system through your solar installer, you are not eligible for the 30% tax credit. On the other hand, businesses satisfy the eligibility requirements for the tax credit if they develop, install, or finance the solar system.
Often times the credit is larger than the tax liability of the purchaser, but the credit can be rolled over into future years as long as the tax credit is still available. If you have little to no federal tax liability, you will be unable to fully take advantage of this tax credit.
At Sunpro solar, we provide high quality solar panels and installation service and do not lease solar panel systems. Our team of solar professionals will work with you to ensure you satisfy the requirements for this valuable solar tax credit and provide you with a sample federal tax form to make filing easy.
How to apply for the 30% Solar Tax Credit?
File Tax Form 5695 with your tax return. That's it!
This is a great way to bring down your solar panel costs. Now is the time to take advantage of the solar investment tax credit while reducing your electricity bill and increasing the value of your home or business. Contact our team of dedicated solar experts at Sunpro Solar today!