Want to understand what the solar tax credit is and what it means for you? We’ll give you a hint: $$$$
What is a tax credit?
A tax credit is a dollar-for-dollar reduction of the amount of income tax you owe. For example, if you owe $2,000 in federal income tax and claim a $1,000 tax credit, you’ll only owe $1,000. It reduces the amount of money you owe by the exact amount you claim.
In other words, it saves you money.
What is the SOLAR tax credit?
The solar tax credit is a federaltax credit that “can be claimedfora percentage of the cost of a solar PV system paid for by the taxpayer.” This means that when you install solar on your home, you can claim the solar tax credit, and a percentage of the total cost of your system will be matched. In August, Congress raised the percent that the tax credit covers from 26% to 30%, which means more savings for you!
Now let’s break down how the solar tax credit works
Let’s say your solar system costs $30,000. 30% is $9,000, and that’s how much you’ll receive at the end of the tax year. When you receive it, you can choose to apply it to your loan and lower your monthly payment, or you can receive the money as a rebate and use it on whatever you want.
BUT the percentage will decrease to 26% in 2033 and 22% in 2034, and may not exist in 2035. So the sooner you go solar, the more savings you’ll get.
To qualify for the tax credit, the installation of the system must be complete during the tax year.
Am I eligible for the tax credit?
Let’s see if you are! There are a few simple things that need to be in place for you to qualify:
- Your solar system was installed between January 1, 2017 and Dec 31, 2034.
- You own both your home and the solar system installed on it.
- Your solar system is new or being used for the first time. The credit can only be claimed on the “original installation” of the solar system.
If you meet all of this criteria, you’re good to go!
Want to learn more about if you qualify for the tax credit? Go to our menu, hover over Contact Us, and click Get A Quote to get started!