The 30% federal solar tax credit is being phased out, and will soon be gone.
Now is the time to take advantage of this massive 30 percent federal solar tax credit bonus. You can get If you install a solar panel system on your property soon.
What is the Solar tax credit?
Officially known as the Solar Investment Tax Credit (ITC), it is a huge federal tax bonus available to anyone who installs a solar energy system. The solar tax credit is available for both residential and commercial systems, but the residential tax credit is phasing out and will be substantially reduced by next year.
How does it work?
- The legislation currently allows you to deduct 30 percent of the cost a solar energy system from your federal taxes. This applies both to home and commercial systems. There is no cap on the value of this amount!
- Let’s take the example of a homeowner who buys a solar panel system that will provide free electric power for his home. If you were to spend $20,000 on a complete system, you would be entitled to deduct 30% of this amount directly off your federal taxes. The saving to you means that your tax bill for the year drops by a whopping $6,000!
- So, if you owe less than $6,000 in federal taxes for the year in which you buy the system, your tax bill for the year drops to zero. Any unused balance rolls over as a further credit to the next year’s tax bill.
- For example, if you buy that system this year you will get a $6,000 tax rebate. If you owe say $4,800 in taxes this year, you will pay no federal taxes in 2018. The unused balance of the rebate carries forward towards next year’s tax, so you will receive a credit of the balance of $1,200 towards your 2019 tax return.
Why was the ITC solar tax credit enacted?
The purpose of enacting this tax credit was to make installing solar power more affordable, and to promote the solar industry. Thanks to the introduction of the tax credit there has been an amazing 59% compound annual growth in the installation of solar systems.
Some quick facts from the Solar Energy Industries Association (SEIA)
- The residential and commercial solar tax credits have resulted in solar power installations growing by over 1,600 percent since the tax credit was put in place in 2006.
- In 2015, Congress implemented a multi-year extension of the credits, but this includes a phase-down of the tax credits rate. This means that the solar tax rebate rate will start reducing from next year. The rebate rate will continue reducing, until the point where it will no longer be available to residential installations after 2021.
- The upside is that the ITC extension through 2021 has given a boost to the solar companies. Encouraging them to invest in the solar sector has resulted in the substantial lowering of solar system costs for consumers. The time to take advantage of this is while the incentives are still in place.
How long will the 30% solar tax credit continue?
The solar tax credit will only be available at the 30% rate until the end of 2019. After which it starts dropping. In 2020 it will be at 26%, in 2021 at 22%. From 2022 it will no longer be available at all to homeowners. Thereafter it will only be available to commercial property installations, and only at the rate of 10%.
Some important reasons to install solar power now
- With the 30 percent solar tax rebate coming to an end next year, the time to consider installing solar power for your home is right now. Don’t wait until it is too late. See here how solar power can provide clean, renewable and free electricity for your home. With a properly designed system it is even possible to reduce your monthly electricity bill to zero. This makes you totally independent of the annual increases charged by your utility company!
- Remember that it takes time to design the ideal system for your home. Arrange now for our no-obligation free consultation and quote at your home. Design the perfect system before the 30% tax credit comes to an end.
- With 2018 soon drawing to a close, now is the best time of the year to get a great deal. In order to make room for our 2019 inventory, we are making the complete range of the latest solar panel systems available in our year end closeout sale. Have a look at what our Solar panel installations can bring to your home.
With a 30% federal tax rebate and the great closeout deals available use our free online estimate link, and see how much you can start saving, the solar way.