Promotions and Tax Credits
What is a Tax Credit?
A tax credit lets you deduct a percentage of the solar system purchase from your tax. If your solar system costs $10,000 and the tax credit is 10%, then you will have the opportunity to deduct $1,000 on your taxes. The deduction reduces your taxable income so you pay fewer taxes.
Tax Credits and Incentives Available
The Federal Solar Tax Credit
Company Incentives & Promotions
In 2005, the federal solar tax credit (commonly known as the ITC) was established in the Energy Policy Act. Originally, the act was supposed to expire at the end of 2007. However, it was so popular and successful that it was continued as the United States renewed its commitment to transitioning to renewable energy. Since those early days, it has been extended several times. The most recent extension took place in December 2020 which extends the ITC for two more years.
The tax credit currently covers 26% of the cost of a residential solar system. That is more than a ¼ of the cost. Here is a look at what the ITC will look like for the next few years:
2020-2022: Residential and commercial solar systems can be deducted at 26 percent of the cost of the entire system from taxes.
2023: New residential and commercial systems can be deducted at 22 percent of the cost of the entire system from taxes.
2024: Commercial solar energy systems can be deducted at a 10 percent rate from taxes.
The year 2024 has no residential solar energy deductions in place currently.
A state incentive is a tax credit that is only available to residents of their state. States like VA boast of their net metering program that allows you to earn credits for any excess energy your system produces, whereas in UT they offer a credit of up to $1,600 which is on top of the federal ITC. State incentives vary from state to state so be sure to do your research to see what is available to you.
Check out how your state’s rebates and tax credits are being scored![blocks_state_solar]
Solar companies occasionally offer their own incentives to help out their customers with the cost of their solar system. These incentives can include energy efficiency packages that consist of LED light bulbs, and thermostats that help you reduce the amount of energy that is being consumed. Depending on the tax incentives available to you, they may even have cash promotions to help offset the cost.
Give us a call to see if we are offering any promotions right now!
How Do I Qualify for Solar Tax Credits?
The minimal requirements to qualify for tax credits are that you have to :
- Pay taxes
- Own your own solar system
The requirements for the tax credit mean that those who are leasing or a part of a PPA do not qualify for the tax credit. These requirements may be different for state incentives.
Claiming Your Solar Investment Tax Credit
You will have the opportunity to claim your solar investment tax credit after you purchase your solar system. When filing your federal tax return, you can easily claim the credit. Here is a link to the ITC solar tax credit form, otherwise known as Form 5695. If you are having your taxes prepared by an accountant then be sure to let them know that you purchased a solar system to make sure they file for the ITC.
The time has never been better to install a solar system.
Contact us to see what promotions, tax credits, or incentives you qualify for!
Get a free quote today!
We’ll cover your first year’s payments*