It’s estimated that by 2030 over one in seven American homes will have a roof solar PV system. The popularity of solar is on the rise, and it’s no wonder why. Not only are you doing your part and helping preserve our planet, but you’re also becoming more energy independent and lowering your electric bill.
One of the biggest reasons people are making the switch is due to how affordable it is now with the tax incentives.
Are you interested in learning more about the many tax incentives for solar panels before you invest in them? If so, read on to discover how much you can save.
The Federal Solar Tax Credit
Tax credits are amounts that people can claim and subtract from the taxes they owe the government. The tax credit reduces the amount of tax you owe, not your taxable income.
The federal solar tax credit sometimes referred to as the Investment Tax Credit (ITC), will lower your tax bill. The residential ITC is different from the one offered to businesses.
The residential solar energy credit allows you to deduct a percentage of the cost of your PV (photovoltaic) system. To qualify, the system has to be installed and placed in service during the designated tax year and generate power for a house in the US.
Congress recently extended the ITC so that homeowners can still take advantage of it. For the years 2020-2022, there is a 26% tax credit. Systems installed in 2023 will receive a 22% credit.
Currently, the tax credit will expire in 2024 unless Congress chooses to extend it.
State Tax Credits
In addition to the federal tax credit, there are also state solar incentives. You can combine these with the ITC for added savings. These solar panel incentives vary by state, so you may need to research the options your state offers to see what you can qualify for in your area.
Some common incentives across the various states include rebates, tax credits, and renewable energy certificates. Certain states have more to offer when going solar than others, such as Texas, California, New York, and Minnesota.
Texas solar incentives, for instance, include several solar rebate programs, tax exemptions, and utility policies that offer credits for extra electricity. If you live in Austin, for example, you can get a $2,500 rebate through Austin Energy. You’re also eligible for Austin Energy’s Value of Solar Tariff.
With so many incentives, you can see how residential solar panels pay off. Talk to your solar installation company to see which benefits and credits you might qualify for to ensure you get the best deal.
Take Advantage of the Tax Incentives for Solar Panels
The sooner you invest in solar, the more you’ll save. We can’t be sure that Congress will extend the ITC, so act fast if you want to claim it. If you use these tax incentives for solar panels, you’ll save a substantial amount of money on top of what you’ll be saving in the future.
Are you interested in more advice for homeowners? Check out some of the other sections on our website for more informative tips designed to help improve your life.