Federal Solar Tax Credit…. Explained
Why going solar by New Year’s Eve could save you big!
We have been discussing the federal solar tax credit for a while now, but what does it really mean? How can you benefit? What do you really need to know? We understand some of the language may be foreign and confusing, so we are breaking it all down plain and simple.
So what is the tax credit?
When you choose to install a solar system, the federal government rewards you with a tax credit for investing in clean, reliable energy. Simply put, it is a dollar-for-dollar reduction of the income tax you owe and pay, which means each $1 credit = $1 less you pay in taxes. You do have to pay enough in taxes within the next few years to be able to use it.
What is the current incentive?
Right now, the Solar Investment Tax Credit (ITC) is worth 30% of your total system cost. This includes the value of parts, equipment, permits, fees, labor and installation. Therefore, if it costs you $10,000 to go solar, and you qualify for the tax credit, you would then receive a $3,000 credit to offset the initial cost.
How long can you benefit from the tax credit?
Here is the thing, the ITC actually reduces at the end of the year. In fact, the credit will continue to reduce 4% each year before it completely expires at the end of 2021. So let’s break that down:
· 2019: 30%
· 2020: 26%
· 2021: 22%
· 2022: 0%
That would mean the deadlines are:
· 30% for systems placed in service by 12/31/2019
· 26% for systems placed in service after 12/31/2019 and before 01/01/2021
· 22% for systems placed in service after 12/31/2020 and before 01/01/2022
Who can qualify?
Every customer, who pays Federal income taxes, that either purchases their system outright, or finances, may take advantage of the federal tax credit. There is an exception for those that choose to lease their system. That’s because if another company leases you the system, they would technically own the system and would be able to claim the ITC. Please consult your tax professional to find out if you qualify for this tax credit, or refer to IRS Form 5695.
Investing in solar is an important fiscal decision and a wise long-term investment; however, timing is of the essence. In order to maximize your savings, contact Sunny Energy, and we can help you take advantage of every state and federal incentive while you still can!
Special Offer: Go solar with Sunny Energy by New Year’s Eve, 2019 and if we can’t install it this year, we’ll pay the difference in a cash-back rebate. Give us a call at: (480) 536-8700 or contact us for a free, hassle-free consultation: