The solar energy Federal Tax Credit
Did you know that the federal government rewards smart homeowners with a lucrative 26% tax credit for investing in solar energy? It’s true! In an effort to encourage people to adopt alternative energy options, and make residential solar electricity systems more affordable, the federal government will compensate homeowners that invest in solar energy with 26% investment tax credit (ITC).
This credit can be used to pay off your taxes or it can be used to pay down the balance on your solar system project cost. For example, let’s say you installed a system for $10,000.00, you would be eligible to receive $2,600.00 tax credit, which is 26% of the total system cost.
Federal Tax Credits Will Expire Soon
If you want the fastest ROI for your solar investment, do not wait. During 2019, the Income Tax Credit was 30%, then ITC steps down to 26% in 2020, then to 22% in 2021, and it completely disappears for homeowners in 2022. The 4% decreases each year is certainly noticeable, however, the current 26% is still a significant savings potential.
- 2020 – 26 percent for residential and commercial
- 2021 – 22 percent for residential and commercial
- 2022 – 10 percent commercial only
There is no better time for homeowners to go solar to take advantage of the federal tax credit to help pay for a solar power system, which will reduce or eliminate their electric bill.
Tax Credit Eligibility
To qualify for the solar federal tax credit, you must qualify for the following:
- You must own your home, not rent.
- Your Federal Tax liability must be sufficient to qualify for the 26% tax credit.
- You must own your solar panels.
How to claim Tax Credit
- First, you’ll need to determine if you are eligible, so its recommended to consult a tax professional before filing your solar federal tax credit.
- Then, you’ll need to complete IRS Form 5695 that validates your residential energy credits, download a form HERE
- Finally, add your energy credit information onto your regular tax form 1040.
Going solar now will ensure the biggest and fastest return on your solar investment. If you would like to know more, please contact one of our qualified solar integrators to start your solar project today! Get your free consultation with no commitment from South Texas Solar Systems.