Solar energy not only helps save the planet, but it can also help you save money!
Did you know that once you install solar panels on your home, you’re eligible to claim a third of your total setup costs on your tax return? For anyone who’s on the fence about switching to solar from traditional power grids, reaping the benefits from the Federal Solar Tax Credit could be just the thing to sway your decision.
Here’s what you need to know in order to do it right:
Understanding the Federal Solar Tax Credit
As mentioned above, the Federal Solar Tax Credit (or the Investment Tax Credit) allows you to claim 30% of your total solar installation, licenses, and equipment costs on your Federal tax return.
This means that if you wind up spending $15,000 altogether on your new solar system, you’ll essentially save $5,000 on your taxes the next year. In fact, research shows that the average solar shopper in 2019 saves around $5,000 just by switching to solar and taking advantage of the current program.
This opportunity was originally introduced in 2016, and Congress has since extended the tax credit to 2022 for homeowners to take advantage of in hopes to promote sustainable energy consumption. However, this deal won’t be around for long.
How the Federal Solar Tax Credit Will Change Over the Years
Unfortunately, the Federal Solar Tax Credit only has a lifespan of 5 years. Not to mention, its value depreciates the longer you wait.
The amount that you can deduct from your following year’s taxes becomes less and less with each passing year. Here’s a quick breakdown of the payout differences:
- 2019: If you purchase solar panels within the year, you can enjoy the full 30% tax credit on your entire system installation. Now is the time to buy since 2019 is more than halfway through!
- 2020: Anyone who makes the change to solar energy can enjoy a 26% tax credit off their total cost.
- 2021: A little late to the game, but homeowners and commercial business owners can still claim a 22% tax credit on their solar panel system from Uncle Sam.
- 2022 and beyond: At this point, only commercial solar energy buyers can claim a modest 10% tax credit on their solar setups. Residential homeowners are out of luck.
Although the deal starts to wither, the U.S government does give buyers a little breathing room to get the job done and reap the rewards. For instance, changes to the program have made it so that people can claim the tax credit immediately after construction and installation is finished. The only catch is that solar systems have to be fully operational by the end of 2023.
Knowing if You’re Eligible for the Federal Solar Tax Credit
Combing through all this information concerning timeframes and percentages may seem a bit overwhelming, but knowing if you’re eligible for the Federal Solar Tax Credit and claiming benefits is pretty straightforward.
Essentially, the only stipulation that determines your eligibility for the Investment Tax Credit is whether or not you own your solar system outright. This means that, if you happen to lease your solar systems through a solar energy provider, you do not own the equipment. Therefore, you’re not eligible for any kind of tax credit.
On the other hand, if you do own your system, great! Claiming your solar tax credit is as easy as informing your year-end accountant about your purchase and giving them the proof, or if you use a virtual tax filer (TurboTax, H&R Block), you can simply plug in the credit and watch your savings roll in.
Working with a Solar Professional Can Help
Whether you’ve already made a solar system purchase or you’re considering taking the plunge, working with a solar professional can help make the process a lot easier.
For those with a setup in place, don’t hesitate to reach out to your provider to ask questions and gain valuable insights so that you can get the most out of your energy plan. From product issues to general questions, an expert-level solar provider should assist you with any problems so that you can live a better life with a sustainable peace of mind. That being said, if solar energy is new to you, then feel free to contact a professional at SolarTime USA to learn more.
Their mission is to always put the customer first. Serving over 21,000 families and businesses throughout the U.S. and Europe, you can trust that your solar needs will be met with the utmost care, and most of all, the greatest affordability.
Reaping the benefits of the Federal Solar Tax Credit is just one aspect of how solar energy can benefit your home, so visit SolarTime USA today and start making a difference for the future.