A Solar installation tax credit is given to anyone who avails of solar panel installation. This is one strategy of the government to motivate people to shift to solar energy as their source of electricity. To find out more about it, here is a guide to the federal tax credit for solar photovoltaics.
What Is the Federal Solar Tax Credit?
Tax credits are the amount given as a deduction to the tax you owe the government. So, getting tax credits can help reduce your tax payables. Therefore, the federal solar tax credit is the credit you can get when you purchase a solar panel system. This is to support the campaign to go green and encourage more people to shift to solar energy usage.
Am I Eligible To Claim The Federal Solar Tax Credit?
To be able to avail of the federal solar tax credit offered by the government, there are qualifications such as:
- Solar installation should be done between January 1, 2006, and December 30, 2023. After this year, federal tax credits are not given anymore, so residences have to take advantage of this offer until 2023.
- Your solar panel installation should be done in your primary or secondary residence in the United States.
- You should own the solar panel system. Meaning your purchase should be in cash or financing under your name and not on the lease. If you are not, be careful in choosing your financial options.
- The solar panels purchased should be new and in their original state.
How Do Other Incentives I Receive Affect The Federal Tax Credit?
Other incentives are given, apart from the federal tax solar credit. Computations will be based on the updated tables. These are the possible additional incentives you can get:
Rebates Coming from Electric Utility
Rebates are given to solar panel users and are exempted from the federal tax law. The rebate is deducted from the cost of the solar panel before calculating your tax.
Renewable Energy Certificate Payment
Having renewable energy certificates can increase your gross income, but it will not decrease your federal tax credit.
Rebate From State Government
As an additional incentive, the government gives a rebate to every resident who will be available for a solar panel installation. The One-time rebate is usually $1,000, not bad, right?
How Does Federal Solar Tax Credit Work?
Upon purchasing a solar panel system, you can report it as an additional asset, then it will be noted, or you can let your accountant know so that they can add it to your tax reports. At the end of the year, the amount computed from your solar panel purchase will be computed at 26%, then credited to your tax payables. If your federal tax credits exceed, they will be carried to the next year.
What is Included in the Federal Solar Tax Credit?
The number of solar panels depends on your energy needs. Worry not since there is no limit to the number of solar panels that can be eligible for federal solar tax credits.
Installation needs to be done by several technicians and includes assembly, on-site preparation, inspection fees, and developer fees. Installing solar panel permits is needed as well as developer’s permits, so they are included in the solar panel system package.
Solar panel system includes a solar panel, inverters, switch, cable, batteries, and other structures to make it work. All components involved included the solar panel system. Therefore, it is counted on the amount that will be computed for the federal solar tax credit.
Hope this guide to the federal tax credit for solar photovoltaics can help you have a clearer understanding of how the federal solar tax credit is given as an incentive. Solar panel systems can be pricey, but worth it since you can get incentives upon purchase as well as save a lot from your bills once you shift to solar energy usage. Take this opportunity to get that federal solar tax credit while it is still offered. If you are not ready with the budget, a lot of financial options are available which will still qualify you for the federal solar credit tax. Contact your solar provider now and discuss your plan on getting a solar panel system.