You know how some things are “need to know”? This is one (okay, three) of those things.
Especially if you’re thinking about buying solar panels anytime soon—like within the next few years. Buying now could save you a lot of money.
Why? Because of the federal solar tax credit that is currently in place. If you purchase your panels and begin installation sooner than later, you may get to apply this tax credit. This could help you save up to 26% off your solar purchase!
It’s an amazing deal. Let’s take a closer look at this incredible solar incentive and the three major points you need to know about it.
1. What Is the Federal Solar Tax Credit?
The federal solar tax credit, or the investment tax credit (ITC), is a federally backed tax incentive for solar energy. It was established through the Energy Policy Act of 2005. Though it was originally set to expire in 2007, its popularity helped push an extension.
The expiry date has been extended several more times since then. Now in 2020, the ITC is still going strong, helping to propel the US toward more eco-friendly, renewable, solar energy.
A fantastic savings opportunity for US buyers, the ITC currently allows you to take 26% of the cost of your solar energy system off your federal taxes.
It’s important to note that the percentage will drop (or step down) after this year (2020). More on this in a bit.
2. How Does It Work?
Essentially, when you purchase a solar energy system (solar panels) for your home or business, you can deduct 26% of the cost of your new system off this year’s federal taxes. Installation must begin prior to December 31, 2020, to get the full 26% rebate this year. Read on for more about the step-down of this deduction.
There is no maximum limit on the ITC; you can spend as much as you want on your new solar panels and still take 26% of the cost off your taxes. Also, the ITC can be used with either residential or commercial solar systems. You can get this tax credit every year that you own your solar system.
NOTE: You must own your system in order to qualify for the solar tax credit. Leased systems are not eligible.
3. What Does the “Step-Down” Mean for Me?
The solar investment tax credit is available for residential systems through 2021, though the percentage began stepping down in 2020. Initially, the ITC allowed 30% of the cost of your solar system to be deducted from your taxes.
At the beginning of 2020, that stepped down to 26%. It will decrease by another 4% in 2021 to 22%. The federal solar tax credit is set to expire at the end of 2021 for residential buyers.
Commercial systems will still be able to 10% back in 2022 and beyond.
Ultimately, this means that you may want to purchase your new solar energy system sooner than later to save the most money. Especially if you’re a residential customer! This amazing tax credit is set to disappear for residential systems after 2021.
For more on available credits and incentives, check out this recent post about solar rebates and solar incentives.
Solar Sam: Your Partner in Affordable Solar Energy Solutions
When you buy a solar power system, solar panels, and/or solar products from us, you become a valued member of the Solar Sam family. And we do our very best every day to take excellent care of our Solar Sam fam!
Solar Sam is a fast-growing local solar provider and solar installer based in Columbia, Missouri. Of course, we provide Missouri solar and Illinois solar, but we also service the entire continental United States. No matter where you are in the country, we can help you with quality solar energy solutions!
We pride ourselves on carrying the latest tech and the highest quality solar products.
What’s more, Solar Sam has expert solutions for residential, commercial, and agricultural applications. We’re here to help you with all your solar needs (and wants). We offer a full range of quality solar products, professional solar panel installation, and solar panel cleaning (for both residential and commercial arrays).
Check out the 5 Things You Need to Know About Buying Solar panels, and visit our website for deals that are out of this world.
Give us a call at 833-RU-SOLAR (833-787-6527) to get started with a free quote. Solar Sam helps you power your life with green energy run by the sun!