What is the Solar Investment Tax Credit?
Before the ITC was instituted in 2006 by the federal government, the solar industry was much smaller. The government decided to fix that by incentivizing people to make the switch to solar power with tax credits. In other words, the U.S. government basically agreed to give people free money with the belief that it would help boost the solar industry. And boy, did it work.
Once people realized that they could get 30% of the costs back with the solar investment tax credit, more and more of them decided to make the switch to solar. Thanks to the solar ITC, the solar industry has made huge strides forward. In just ten years, the cost of solar panels decreased by over 60%, and the amount of green energy generated in each state has shot upwards. According to the Energy Information Administration, renewable energy accounted for nearly 20% of all electrical generation in the U.S. in the first half of 2018 alone.
How Much Longer is the Solar Tax Credit Available?
Sadly, the amazing solar tax credit that caused such growth for the solar industry is on its proverbial last leg as 2019 is the last year to claim the 30% solar federal tax credit. The solar investment tax credit was extended once before in 2015, but that extra time is quickly running out.
Available Solar Tax Credit
30% tax credit for both residential and commercial solar panels.
26% tax credit for both residential and commercial solar panels.
22% tax credit for both residential and commercial solar panels.
10% tax credit available for only commercial solar panels. No tax credit available for residential solar panels.
As you can see, procrastination will not serve you well here. If you want to get solar panels, and you want to get them for a great deal, you should act now. 2019 is the last year to receive the 30% federal tax credit. It’s very unlikely that this solar tax credit will be extended again, or that a new one will take its place.
30% Solar Federal Tax Credit
What is Required to Qualify for the Solar Federal Tax Credit?
There are a few requirements that must be met to qualify for the Solar Federal Tax Credit.
You must own the solar panel system yourself, either through outright purchase or with a solar loan.
If you got your solar panels through a solar lease, or a Power Purchase Agreement, you are not eligible for the solar tax credit.
Your solar panel system must meet all applicable safety codes, including fire and electrical.
To receive the 30% solar tax credit, your solar panels must be installed by December 31st, 2019.
If your solar panels are purchased in 2019, but are not installed until 2020, you will be eligible for the 26% tax credit instead of 30%.
Your solar panel system must be in use at the time the tax paperwork is filed.
Your solar panel system must get more than half of its energy supply from solar energy.
Please note that this is a tax credit, not a refund. You will not be receiving cash for this incentive. However, the tax credits will roll over from one year to the next.