Congress gave homeowners a tremendous gift by extending the solar energy tax credit program for five additional years. This will make solar energy more affordable for all Americans. How does this impact you as a homeowner?
What is the solar energy tax credit?
First of all, the solar energy tax credit allows you to deduct 30 percent of your solar energy system cost from your federal taxes. The average homeowner has saved nearly $9,000 by switching to solar. However, the additional cost benefit for switching to solar energy is because it can save you up to 70% off your energy bill.
What does the solar energy tax credit extension mean for the solar industry?
The Energy Policy Act of 2005 and was originally set to expire at the end of 2007. A series of extensions pushed the expiration to the end of 2016. Also, experts believe an additional five-year extension will bring the solar industry to its full maturity. Therefore, the tax credit is now available to homeowners through 2021. Here are the specifics:
- 2016 – 2019: The tax credit remains at 30 percent of the solar panel system cost.
- 2020: Owners of new residential and commercial solar can deduct 26 percent of the system cost from their taxes.
- 2021: Owners of new residential and commercial solar systems can deduct 22 percent from their taxes. However, the solar energy system must be operational by December 31, 2023, to claim the credit.
- 2022 onward: Owners of new commercial solar energy systems can deduct 10 percent of the cost from their taxes. Nevertheless, there is no federal credit for residential solar energy systems.
Do I qualify for the solar panel tax credit?
Homeowners who own their solar energy system are eligible for the solar tax credit. Consequently, leasing a solar energy system disqualifies you from receiving the tax credit.
More resources on the extension of the federal ITC
- The Wall Street Journal explores the legislation and what it means for today’s homeowners.
- Read the language of the official bill (Section 303, beginning on pg. 2005, details the specifics of the extension).
Find Out If You Qualify