SUNday Blog: Alright, Tax Credit, how do you really work? 

Nov 22, 2020Consulting, Environment, Solar

The list of available solar financial programs in the USA seems to have no end but let’s bow to the most popular. The Federal Solar Tax Credit (ITC) is considered to be a leader in the advocacy and promotion of a sustainable energy future.  At the forefront of subsidizing solar panel installations for residential, commercial, and utility-scale projects, the Federal Solar Tax Credit is the main driving force in the solar energy field. So, let’s see how the Federal Solar Tax Credit works for residential and commercial PV system installations. 

By the end of 2020, the Federal Solar Tax Credit will amount to 26% of the complete solar installation costs. Solar panel installations plugged in before December 31, 2021, are eligible to receive a credit of 22% of the installation costs. But in 2022 only commercial or utility-scale PV systems will be able to take a 10% federal tax credit from the initial investment, unless Congress renews it for residential installations, too. Feel free to step into the world of renewable energy and invest in a solar power system before 2022 and take full advantage of the most attractive financial support before it’s gone. 

 

Do you qualify for Federal Solar Tax Credit?

If you are an American resident and a taxpayer, homeowner, or business owner, and want to invest in a residential or commercial solar power system, you are entitled to get a credit from the Federal Solar Tax Credit (ITC). Also, you must own the PV system, so leasing a PV system is not an option here.  

Your Federal tax liability must be sufficient to qualify for the amount referred from Federal Solar Tax Credit. If the solar panel system is switched on in this tax year, the tax administration will deduct the determined amount from your taxes in the next tax season. If your Federal Solar Tax Credit figure is greater than your IRS obligations in the first tax year, you can continue to use the remaining sum for a total of five years. 

What expenses are included in the Federal Solar Tax Credit program?

The main goal of the USA’s government is not just to improve people’s standard of living by reducing monthly utility bills, but also to reduce Carbon Footprint and improve solid sustainable development. So, the Federal Solar Tax Credit is cutting down costs for complete PV installations:

  • solar panels
  • PV system components – inverter, battery storage, charge controller
  • mounting material, connection material
  • projecting, contractor services
  • permits, inspection costs

Note: Keep all receipts to achieve a maximum financial return from the IRS. 

Sun alone is not enough

Reduce overall costs, using the generous Federal Solar Tax Credit, and get a faster return on investment in the PV system. 

Streamlining the permitting process and dropping prices on solar systems are helping reach grid parity. While electricity rates are getting linearly upwards, renewable sources of energy from your roof will ensure the maximum possible yields and thus significant savings. Federal Solar Tax Credit is working in favor of residential, commercial, and utility-scale PV growth. We are currently living in the best time to go solar.