Federal Tax Incentives
Solar investment tax credits (ITC) are one of the main driving forces behind the growth of affordable solar energy. It offers a 30% Federal tax credit for purchased solar systems. 30% of the purchase and installation cost of every qualified solar system can be claimed by a business or homeowner when filing their annual tax returns. According to the SEIA (Solar Energy Industries Association), in so many words, the tax credit is a “dollar-for-dollar reduction in the income taxes that a person or company claiming the credit would otherwise pay the federal government.” It applies to utility-scale, commercial, and residential solar projects.
Please note here the solar investment tax credits (ITC) are for PURCHASED systems, so you are only able to reap these benefits if you are in a financial position to buy the system outright. Lease and power purchase agreements (PPAs) are other viable, affordable options for you to save money on your monthly electric bill. The difference is — the company that offers you the lease or PPA would be able to claim the tax credit.
The full 30% tax credit has been extended until 2019 and then starts to decline, so it LITERALLY pays to ‘act now’ to receive the best deal possible regarding solar. The chart below outlines the percentage drop between now and 2022. After 2022, the only tax credits available will be for purchased commercial systems, offering 10%. The residential tax credit ends at the end of 2019, and unless it’s renewed, you don’t want to miss out on this opportunity.
Think of it this way:
Our federal tax dollars are paying for these subsidies to increase solar capacity. If you lease or sign up for a power purchase agreement, it will lower your electric bill, and the right solar company will not require any money out of your pocket to sign up. If you purchase the system, you’ll receive a return on invesment within a few years and will be able to reap additional benefits (like SRECs – solar renewable energy credits) depending on the state you live in. If your tax credits already pay into this offer to increase cleaner energy generation, why not see if you qualify?