Homeowners can save on the cost of solar installation by taking advantage of a 26% Investment Tax Credit (ITC) for solar energy.
Congress recently extended this tax credit, which allows a dollar-for-dollar reduction — equaling 26% of the costs of the system — in your federal income taxes. For example, a solar system that cost $10,000 may qualify for a $2,600 tax credit.
Latest Information About the Solar Investment Tax Credit
In great news for green, renewable energy, the U.S. Congress passed the Consolidated Appropriations Act in December 2015, extending the expiration date for the Investment Tax Credit for photovoltaic and solar thermal technologies, and introduced a gradual step down in the credit value for these technologies.
The following is a breakdown of the available tax credit over time:
- 26% for residential systems placed in service through 2022
- 22% for residential systems placed in service in 2023
- 0% for residential systems placed in service in 2024 and beyond
- Until the end of 2022, a taxpayer may claim a credit of 26% of qualified expenditures for a system that serves a dwelling unit located in the United States that is owned and used as a residence by the taxpayer. The home served by the system does not have to be the taxpayer’s principal residence.
- Expenditures include labor costs for on-site preparation, assembly or original system installation, and for piping or wiring to interconnect a system to the home.
- If the federal tax credit exceeds tax liability, the excess amount may be carried forward to the succeeding taxable year.
To take advantage of the full 26%, a system needs to be installed by the end of 2022.
Contact Sandbar Solar to learn more about the Investment Tax Credit for solar energy. And we recommend that you speak with your tax attorney to confirm eligibility for this credit.