If you are considering installing solar panels at your home or business, then the time to act is now. The solar Investment Tax Credit (ITC) is being phased out due to a 2015 federal tax law change.
The solar ITC is a residential and commercial 30% solar energy property tax credit. Originally implemented in 1976 as a 10% Energy Investment Tax Credit, it has been increased and decreased over the years and most recently was increased to 30% in 2006. This increase has helped fuel a boom in solar generated electricity; installations grew 17-fold through 2018. The solar ITC is a direct “dollar-for-dollar” reduction in your federal income tax. It effectively reduces the cost of solar by 30%, with no cap on a solar installation’s value. If your federal tax liability is less than 30%, you can “roll over” the remaining credit towards up to 7 years of future tax seasons!
However, the solar ITC is being phased back to the original 10%. The 30% tax credit will only continue to apply to commercial and residential solar installations that begin no later than Dec 31, 2019. Installations begun in 2020 will receive a credit of 26%, while those started in 2021 will qualify for only 22%, and in 2022, the Solar ITC will drop to 10% for commercial properties and remain there permanently, while credit for residential properties will expire.
Gary Gerber, Founder and President of Sun Light & Power said, “What many people don’t know is that if you pay 5% of the cost of the installation before the end of 2019 – and the job is underway – you can take advantage of the full 30% tax credit.” Permissible construction delays aside, all solar energy property constructions begun through 2021 must also be placed in service by the end of 2023 to qualify for the solar ITC. Finally, you must own (rather than lease) your solar energy installation to be eligible for the solar ITC.
The sooner you invest in solar the more you will save. Call Sun Light & Power today at 800-233-4789 for more information on solar Investment Tax Credits and be sure to ask for a free quotation for your solar project.
Seamas Brennan is a Blog Contributor, Researcher, and Engineering Admin. Assistant at Sun Light & Power