The United States federal government subsidizes the purchase and installation of solar power generating systems with a general federal solar tax credit. The renewable energy tax credit is available to both residential homeowners and commercial businesses. It also significantly reduces the payback time for solar power investments.
The solar investment tax credit was brought to life in the Energy Policy Act of 2005. While this federal solar tax credit was originally only supposed to last until 2007, the popularity of the program has led to extension for homeowners through 2021. Even though it has been extended, the terms of the credit are not the same year to year.
How much is the Federal Solar Tax Credit?
Right now through 2019, the tax credit is and will remain at 30% of the solar panel and installation expense. For 2020, the credit will reduce from 30% to 26%. In 2021, this incentive will dive even lower to 22%. After 2021. The residential solar tax credit is slated to fully expire and only a smaller 10% credit will be available for commercial solar energy systems. To read more about the renewable energy tax credit visit this link.
Am I Eligible for the 30% Federal Tax Credit?
Eligibility for the solar tax credit is fairly simple, although there are a few things to look out for.
You will need to be the owner and the buyer of the solar system you are installing to be eligible. Thus, solar panels must be installed on your own and live in between January 1, 2009 and December 31, 2021. Rentals do not qualify, but second homes do. If you lease the solar panel system through your solar installer, you are not eligible for the 30% tax credit. Businesses satisfy the eligibility requirements for the tax credit if they develop, install, or finance the solar system.
Often times the credit is larger than the tax liability of the purchaser. If you have little to no federal tax liability, you will be unable to fully take advantage of this tax credit.
How to apply for the 30% Solar Tax Credit?
File Tax Form 5695 with your tax return. That’s it!
Here at Sunpro solar, we provide high quality solar panels and installation service and do not lease solar panel systems. Our team of solar professionals will work with you to ensure you satisfy the requirements for this valuable federal solar tax credit. We will also provide you with a sample federal tax form to make filing easy.
Now is the time to take advantage of the solar investment tax credit. Contact our team of dedicated solar experts at Sunpro Solar today!