In December 2015, Congress passed a bill that would extend solar installation tax credits to homeowners through 2021. The best deal expires Dec. 31, 2019, but you can still get a credit for the next couple of years.
According to the Solar Energy Industries Association, the U.S. solar industry has grown by more than 10,000 percent since the tax credit was enacted in 2006. Hundreds of thousands of jobs have been created through the extension, and billions of dollars have been added to the U.S. economy in the process.
From 2016-2019, homeowners could deduct 30 percent of the cost of a new solar panel system from their taxes. In 2020, that will drop to 26 percent, and in 2021 it will drop to 22 percent. If your tax liability is less than the amount you deduct, you can carry the remaining portion over to future years.
It isn’t like a typical tax credit, which reduces the amount of taxable income. Instead, it affects the bottom line of what you owe.
From 2022 on, only commercial systems will qualify for the tax credit, and it will only be 10 percent.
The average national cost of installing a solar panel system in 2019 is $17,940, according to Energy Sage. Under that scenario, the solar tax credit would reduce your taxes by $5,490.
According to the IRS, the exact dates of installation and Residential Renewable Energy Tax Credit availability are:
In the case of property placed in service after December 31, 2016, and before January 1, 2020, 30 percent.
In the case of property placed in service after December 31, 2019, and before January 1, 2021, 26 percent.
In the case of property placed in service after December 31, 2020, and before January 1, 2022, 22 percent.
You have to own the system (or have a loan on it), not lease it, to get the credit.
According to Energy Star, the solar installation must be certified by the Solar Rating and Certification Corporation or a similar government-endorsed agency. The credit isn’t available for swimming pools or hot tubs.
The credit does cover installation costs.
Over the last decade, the cost associated with installing a solar energy system dropped 70 percent, and the use of solar power has ranked as No. 1 or No. 2 in new electric additions in residential homes over the past six years, according to the Solar Energy Industries Association.
There are additional tax credits for solar water heaters, geothermal heat pumps, small wind turbines, and solar roof tiles.
Right now, solar energy accounts for 2 percent of total U.S. electricity. It’s cheaper than ever, and solar energy can be stored in batteries for future use!
Crystal Huskey is a content writer at PTACUnits.com, an online retailer of new and reconditioned PTACs, along with a full range of parts and accessories.