By Scott Laskey
The federal solar tax credit: it’s been a critical part of renewable energy access for U.S. households for years. Approved as a part of the 2016 federal spending bill, the solar panel tax credit extension took the existing solar tax credit and extended it for five years.
This effort made solar power more affordable for Americans who wanted to install residential or commercial systems. Some changes are facing the federal solar tax credit in 2019, though, and the program will undergo major shifts in the coming years.
Here’s what you need to know.
Wondering how the ITC got started? It was born with the Energy Policy Act of 2005. Initially, the ITC was supposed to expire within two years – by the end of 2007. The program had enjoyed a considerable measure of success, though, so lawmakers granted a series of extensions that promised to keep the program alive until the end of 2016.
By the end of 2015, the solar industry was booming, the national focus on solar and renewable energies was growing, and lawmakers believed that extending the program even further would allow the solar industry to reach its full potential. As it turns out, they were right. The U.S. solar industry has grown by more than 8,600% since the ITC emerged in 2006. That’s an average annual growth of 50% in the last ten years alone.
The federal solar tax credit is also known as the solar investment tax credit or ITC. The solar investment credit allows users to deduct 30% of the installation costs associated with their solar energy systems from their federal taxes for the year of installation.
While many people believe the ITC only applies to residential solar systems, it also extends to commercial systems, and there is no cap on its value. Today, the average cost of installing a solar panel system is about $18,300. That means the federal solar tax credit can save some customers upwards of $5,000 on the cost of going solar. With this in mind, it’s easy to see why the ITC has become so popular.
As it stands now, the tax credit is available until 2021. The structure of the program is changing, though, and claim amounts are decreasing in the coming years.
If you’ve heard about the solar tax credit but not yet taken advantage of it, you probably have questions about how to claim the credit in 2019, or if you’re even eligible. Here are four facts you should know:
Here’s a critical consideration for anyone considering a commercial solar project in 2019: you can preserve your 30% tax credit until 2023. This means that as long as you invest the minimum of 5% into your project by the end of 2019, you’ll be able to carry the 30% tax credit over into the next year.
Available to both commercial and residential users, the solar tax credit is a fantastic program that makes solar installation more affordable for those interested in it. With that in mind, don’t delay your solar installation. All you have to do to get the credit is invest 5% of the project value by the end of the year
If you’re thinking of going solar and you live on the Central Coast or in the San Francisco Bay area, contact us today to get a quote for your project.
Scott is the founder of Sandbar Solar & Electric. With a Bachelor’s Degree in Economics from UC San Diego, Scott has an NABCEP certification, and has lectured on and taught many high-tech construction practices and solar PV technical concepts to education institutions, including Stanford University and state-recognized electrician apprenticeship programs. Scott enjoys sharing his knowledge of the evolving renewable energy space and making a difference in his community.
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