The federal solar tax credit is stepping down over the next few years. If you’re a home or business owner you should be thinking about moving quickly to take advantage of the savings the tax credit offers.
Homeowners must have permission to operate their system by their utility company, which is the last step in your solar installation, by December 31 to receive that year’s tax credit.
The IRS states the system must be fully operational, or “placed in service.”
The tax credit drops from 30 percent in 2019 to 26 percent in 2020 and 22 percent in 2021.
Read more about the Federal Solar Tax Credit Phase-down for Residential Solar Energy Systems from the Solar Energy Industries Association here.
Get started with a free, no obligation solar estimate to find out about the benefits of clean, affordable solar energy!
What is the 30% Federal Tax Credit?
Otherwise known as the Investment Tax Credit, the Solar Tax Credit allows you to deduct 30% of the cost of your solar system from your federal taxes.
Put simply: if you spend $20,000 on your solar system, you pay $6,000 less in taxes when you file. The tax credit is different than a refund or a rebate. This means that you have to owe taxes to claim the credit. If the credit is larger than your tax liability in the first year, the remaining amount can be applied the next year. Generally, all expenses included in the quote you receive from your Solar Consultant can be included in the deduction. There is no cap on the value of the credit, and it is available to both residential and commercial customers. Every tax situation is different, however. Here is the tax form for you to bring with you when you meet with your accountant or finance professional.