Good news travels fast, and we’re here to tell you some incredible news!
Especially if you’re thinking about going solar with a new solar energy system and solar panels.
The federal solar tax credit is also known as the Investment Tax Credit (ITC). The ITC was set to decrease to 22% (from 26% in 2020) and expire for residential solar in 2021. But, as of December 27, 2020, that has changed! A new tax package, which included the option to extend and enhance the solar tax credit, was signed into law!
This means you could save up to 26% on the purchase of a new solar energy system through the end of 2022!
Let’s look at what this means for those of you who want to go solar in the next couple of years.
Remind Me…What Is the Federal Solar Tax Credit?
The ITC is a federal tax incentive for renewable energy, including solar. It came about via the Energy Policy Act of 2005 and has been extended several times since its original expiry date of 2007.
The tax credit helps to make more eco-friendly, renewable energy sources more affordable for Americans. It essentially gives buyers a credit on their federal taxes when they purchase a new solar energy system for their home, land, or business.
If you purchased your solar panels in 2020, you could deduct 26% of the cost of your new system off last year’s federal taxes. Before this new tax package was signed in December, that percentage was set to drop to 22% in 2021. Worse yet, the ITC was set to expire completely for residential solar systems at the end of this year.
But wait! Here’s the great news.
As of the passing of the tax package in December, you now have until the end of 2022 to save 26%!
Yes, that’s right. 26%!
Now, instead of saving only 22% in 2021, the federal tax credit has been locked in at 26% for two additional years. That’s a sweet deal.
IMPORTANT THINGS TO NOTE:
- 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.
- The investment tax credit can be used with either residential or commercial solar systems.
- You must own your system to qualify for the solar tax credit; leased systems are not eligible.
For more on available credits and incentives, check out this recent post about solar rebates and solar incentives.
Also, read more here on the federal solar tax credit and its history.
Check back often, as we will soon publish a post on how to claim the ITC on your taxes!
Solar Sam: Your Partner in Affordable Solar Power
Solar Sam is one of Missouri’s fast-growing local solar providers and solar installers. We are based in Columbia, Missouri. Of course, we provide Missouri solar, Kansas 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 the best solar energy solutions for your unique needs!
Solar Sam has expert solutions for residential, commercial, and agricultural applications. We offer a full range of quality solar products, professional solar panel installation, and even solar panel cleaning (residential and commercial).
Visit our website for deals that are out of this world! When you’re ready to take advantage of this incredible federal tax incentive, give us a call at 833-RU-SOLAR (833-787-6527) to get started with a free quote.
Solar Sam is here to help you power your life with green energy run by the sun!