Updated: Apr 10
IT'S TRUE!! Going solar will save you substantial money on your energy costs over time.
Homeowners can save up to $50,000 in energy costs by switching to solar. But now, with state and federal solar tax credits, you can save even more!
Installing a solar energy system in your home or business may sound expensive and overwhelming. With available solar panel tax credits, you can be refunded thousands of dollars by both local and federal governments, making solar energy even more affordable than it already is.
Do you think that all these solar energy system savings are too good to be true? Think again! Let's run through everything you need to know about the solar panel tax credit. We'll tell you what it is, how much money you can save and how to claim this refund.
What is the Federal Solar Tax Credit?
The solar tax credit allows homeowners to get money back through their taxes when they transition to solar energy use. The government tax credit is a dollar-for-dollar credit that you can use to reduce the amount of taxes you owe to the federal government.
It's important to note this tax credit is, in fact, a credit. It is not a subsidy or a refund, and it is super easy to claim. But first, let's take a look at the savings available and when the tax credit expires.
The Federal Solar Tax Credit, commonly referred to as the Solar ITC (investment tax credit), resulted from the United States government passing the Energy Policy Act of 2005. This tax credit has gone through several extensions by Congress, with the latest passed in December 2020. The 2020 extension provides a 26% tax credit for residential solar systems installed in 2020-2022 and 22% for home solar systems installed in 2023. (Systems installed before December 31, 2019, were eligible for a 30% tax credit.) No maximum amount can be claimed.
The tax credit expires in 2024 unless Congress renews it; we suggest you start the process now to avoid missing out on these benefits.
What State and Local Solar Incentives are Available?
In addition to federal tax credits, several states offer solar incentives. Each state has different incentives in place, but a few common ones are tax credits, rebates, and renewable energy certificates.
Different agencies offer different solar financial incentives; your TriSMART Energy Advisory will provide details on available incentives in your location and consult the Database of State Incentives for Renewables & Efficiency for specifics.
How Do You Qualify for Solar ITC (Investment Tax Credit)?
To qualify for the full credit, you must own your home and solar panels and pay enough Federal taxes to be eligible for the credit since it is not a rebate. The amount you can claim from your installation cost will depend on the above dates, based on when you install your solar panels.
However, one thing to note is that you must own the system. For example, if you sign a lease or a power purchase agreement, you don't own the system until it is paid off.
Is it Difficult to Claim the Federal Solar Tax Credit?
With so much in savings, you might think, "You've got to hop through an infinite number of hoops to cash in on thousands of dollars in credit, right?" WRONG!
Claiming the energy tax credit is very easy. If you are doing your own taxes, you'll need to complete IRS form 5695, Residential Energy Credits. If you don't do your own taxes, you can ask your tax professional to do it for you and send in the form with your taxes.
That's it! It is that simple.
Go Solar Today & Save Extra Before It's Too Late!
Don't wait any longer to change to clean energy. Take advantage of the higher 26% federal solar tax credit and start saving money on your energy costs this year.
If you want to calculate the savings quickly, you'll experience by changing to solar and get a FREE quote? Click here to calculate.
As a five-star-reviewed company with an A+ rating from the Better Business Bureau, TriSMART Solar is here to help you with every step of the process, from the site assessment, and 3D custom design, to the installation.
Check out what our customers have to say and see previous jobs to get a complete picture of what going solar can do for you by clicking here.
Have any other questions about the federal solar tax credit? Leave a comment below, and we'll answer it!