The Solar Power Tax Credit
The federal solar power tax credit, also known as the Investment Tax Credit (ITC), allows you to deduct a percent of the cost of installing a solar energy system from your federal taxes. The ITC applies to both residential and commercial systems, and there is no cap on its value. Thanks to the ITC, the average solar homeowner currenlty saves over $5,000 on the cost of going solar.
But the Solar Power Tax Credit is set to Sunset!
- 2016 – 2019: The tax credit remains at 30% of the cost of the system.
- 2020 -2022: Owners of new residential and commercial solar can deduct 26% of the cost of the system from their taxes.
- 2023: Owners of new residential and commercial solar can deduct 22% of the cost of the system from their taxes.
- 2024 and beyond : The federal credit for residential solar power systems is no longer available though owners of new commercial solar power systems can deduct 10% of the cost of the system from their taxes.
In previous years, owners of new solar energy systems could not claim the tax credit unless their system was operational. The current legislation allows you to claim it as soon as system construction is complete.
Every year as the end of the tax year approaches, home and commercial owners rush to purchase solar to take advantage of the tax credit. This often results in high installation volume that could put your tax credit at risk.
We recommend you act quickly to avoid the year-end crunch, and be sure to get a commitment from your installer about their ability to complete construction by year end.
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