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Thursday, May 26, 2022

What Solar Panel Tax Credit Can You Claim During Tax Season?

If you’ve recently installed solar panels on your home, you may be able to get a lot of money back through solar panel tax credits and rebates.

Going solar is a huge decision, but one that can pay huge dividends over the months and years that follow. For most families, it’s possible to hit the break-even point within eight to 10 years. Not only that, but you’ll be lowering your carbon footprint, which helps combat the ever-increasing effects of global warming.

One of the quickest ways to make back money on your solar panel system is through the federal solar panel tax credit and other state and municipal tax credits. All-in-all, you could get nearly half of what you paid for your solar panels and installation back through tax credits and rebates. This makes the daunting up-front cost an easier pill to swallow, so keep reading and learn how it’s done.

What Is The Federal Solar Panel Tax Credit?

The federal investment tax credit (ITC) was put in place back in 2006 when solar power was still a relative unknown for the average homeowner. Since then, and partially due to the ITC, the solar industry has grown by 10,000%.

Anyone that invests in solar panels for their home or business qualifies for the ITC, which entitles them to a 26% tax credit. Instead of getting a rebate, you get a credit that lowers your tax bills for the year.

It’s an incredible incentive that makes installing a solar panel system, which can quickly get up into the $20,000 range, much more palatable for the average homeowner. To learn more about the cost of solar, talk to a local solar provider.

The requirements for federal tax credits are that you must own your system instead of lease it. You must have purchased it between January 2006 and December 2023 (the ITC is going down to 22 percent in 2023 and ending in 2024). It must be located in the US and be part of your primary or secondary home.

Learning More About Other Tax Credits And Rebates

The ITC isn’t the only credit that you can apply for.

There are similar tax credits for solar at the state and municipal level that you may qualify for, but it depends on where you live. California, Texas, New York, and Minnesota all offer valuable solar incentives.

At the municipal level, you can get subsidies for installing solar panels and rebates based on how much energy your system produces.

SRECs

Another great way to make money from your solar panels is through solar renewable energy certificates (SRECs). It’s a simple process whereby the state government will track how much energy your solar panels produce and issue these SRECs as a reward.

You can turn around and sell your SRECs to the local energy utility and get taxable income in return.

Going Solar Is A No Brainer

As you can see, the solar panel tax credit is just the tip of the iceberg when it comes to solar panel savings. Going solar is becoming more and more of a no-brainer these days, so find a solar provider near you and get some panels installed ASAP. You won’t regret it.

If you enjoyed this post, come back again for more tech and business.

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