What is the solar tax credit?
Solar tax credit was implemented in 2006, and it enables you, as a solar energy consumer, to deduct 30% of the cost of installing your solar energy system, from your federal taxes. It is simply based on the amount of your investment in solar property, and applies to both, residential and commercial properties.
The ITC is greatly responsible for the extreme growth of the solar industry in the United States. It’s contributing to the fight against climate change, and has proven to be successful and effective when it comes to reducing emissions and promoting clean energy, as solar energy is continuing to grow rapidly throughout the country!
Would you like to apply credit to your own personal income taxes? Of course, you would!
Solar power users: Don’t forget to claim your solar investment tax credit when you file your yearly federal tax return. As long as you own your solar energy system, you are eligible for ITC.
The solar tax credit is fighting climate change. It is no secret that carbon, along with other greenhouse gas emissions, have greatly increased over the past few decades, and our planet is in jeopardy because of it. Solar energy is a large contributor to fighting this climate crises. It is renewable, carbon free and affordable! And the ITC gives you a reason to buy in. Most can agree that a strong tax incentive is the best and most efficient way to encourage solar energy installations on your properties!
As effective and productive as the ITC is, percentages are changing for the future as the years pass. Originally, the ITC was set to expire in 2007, but due to its popularity and success, it has been granted extension after extension. The ITC is now gradually headed towards a decline. It must be true that nothing great lasts forever. There is still plenty of time to enjoy your solar tax credit, but here’s the heads up:
After 2019, the solar tax credit will drop from 30% to 26%, but don’t panic!
Although, in 2020, the 30% tax incentive for your solar energy costs will now drop to 26%, it is still important to take full advantage of the ITC. Because even though there will be a slight percentage decrease, here are all the ways that the ITC has, and still will, positively affect the earth:
- The ITC is lowering the cost of rooftop solar power, and is bringing access and affordability to the concept of clean energy in the United States for home and business owners.
- It is largely responsible for the extreme growth of the solar industry throughout the years. (A 50% compound annual growth rate since it was put in place in 2006)
- The growth of the solar industry is creating hundreds of thousands of jobs nationwide, and is even investing billions of dollars in the US economy.
- Progress towards the decarbonization of the US energy system means reducing pollution, which results in a healthier future for you and the generations to come.
- The ITC leads to a stronger and cleaner economy!
The solar ITC schedule is undergoing change, and it is important to be aware of this. As mentioned, the solar tax credit percentage will begin dropping in 2020. It will continue to decrease little by little each year, leading to an eventual complete phase-out by the year of 2022. To be exact, residential credit will be phased out to zero, while commercial credit will remain at a permanent 10%. As a solar power user, it is important to take advantage of the ITC while you still can!