Are you considering solar installation for your home? Many homeowners have considered residential solar but been put off by the cost. Now, a federal solar incentive program is making it easier than ever to hire a solar panel installer, reduce your energy costs and carbon footprint, and ensure that you have power even when the grid goes down. Here’s what you need to know about this federal tax credit.
The Federal Solar Investment Tax Credit currently lets homeowners deduct 26 percent of the cost of installing a solar energy system from their federal income taxes the year its installed. It’s also applicable to commercial systems, and there’s no limit to the amount that can be claimed. In fact, the average shopper can save almost $9,000 by claiming this solar tax credit. The credit will roll over if it exceeds your tax liability for the year, but it only applies to owned solar energy systems, not solar leases. It’s important to note that this credit drops to 22 percent in 2023, and while businesses can still deduct 10 percent in 2024, it goes away completely for homeowners.
The credit can only be claimed for new installations. However, it covers many different aspects of solar energy installation. Homeowners can claim the credit for the cost of solar panels, labor costs including installation, permitting fees, developer fees, and inspection costs, additional solar equipment, batteries that are charged by solar equipment, and sales taxes on these expenses. The credit is not refundable and won’t increase your refund, but it can be carried forward for up to five years, meaning that if you can’t use it this year because you don’t have the tax liability, you can claim it next year.
There are many other solar incentives available, including rebates, state programs, and various other tax credits, depending on your state of residence. Some of these may impact the federal credit, but many can be combined with it to further lower your solar installation costs. For instance, while a rebate from your utility company will typically reduce the system’s cost before you calculate your tax credit, rebates from the state are not likely to reduce the federal credit. If your state offers a tax credit, it won’t reduce the federal tax credit. However, it will increase your taxable income on your federal taxes, because you won’t be paying as much state income tax. Because of that, your federal taxes will be higher, which means you won’t be able to add the amounts of the credits. However, you can still claim the full federal solar credit.
With so many credits and rebates available, why wouldn’t you choose to go solar? If you’re looking for a solar energy installer with a stellar reputation and quick turnaround, contact Sunlogix Energy. A leading full-service solar solution at the forefront of creating a sustainable planet, powered by the sun, we’ve been voted the Best Solar Company in the Desert by the Coachella community 2 years running. We offer residential and commercial solar, always striving to provide full customer satisfaction by offering premium products and professional installation at an exceptional value. Focused on using renewable energy to create a cleaner earth, we customize solar solutions for our clients, as well as educating them on the long-term and immediate benefits provided by solar power. Call 888-844-3808 for more information or visit our website to request a free estimate today!