Solar panel prices have been dropping in recent years and the solar power industry has been growing exponentially, meaning now is the perfect time to purchase a home solar panel system.
With the 26% Solar Investment Tax Credit, there’s no excuse not to at least research solar power for your home. Did you know that on average, homeowners can save more than $25,000 over 25 years when they switch to solar power – talk about saving for the future! This clean and pollution-free process can provide electricity to your home less than what your electric company charges. And solar energy potential dwarfs the potential from every other energy resource on the planet, meaning that solar power is only going to expand and grow as demand rises.
How does the 26% Solar Investment Tax Credit work?
The federal government offers a 26% federal solar tax credit to those who purchase a solar power system. The credit is only available to those who finance the system without being subsidized. The IRS is clear that any portion paid using subsidized energy financing (leases, power purchase agreements or PPAs) cannot be used to figure energy property credit. Leases and solar PPAs are considered subsidized energy financing, and solar companies receive the tax credit instead because they retain ownership of the solar power system.
When researching home solar power and considering solar financing options, be sure to review all options including cash, loans and other lines of credit. Viewing multiple options is the best way to discover how the tax credit can help you yield the best price and long-term savings.
How is the credit calculated?
The solar tax credit is calculated as 26% from the net system price. The net price is the purchase price for equipment and labor after any rebates, discounts, promotions or other state incentives have been deducted. As with most tax credits, the IRS does not allow double-dipping.
Solar Investment Tax Credit was passed as part of the 2009 American Recovery and Reinvestment Act. Recently, Congress has agreed to extend the solar ITC at the current 26% rate through 2020, after which it will fall to 22% in 2021 and 10% in 2022.
Take full advantage of this tax credit while you can and save BIG in the future!