Solar Tax Credit Expiring – The Sooner You Go Solar, The More Money You’ll Save

See the Current Federal Investment Tax Credit Schedule & Expiration Dates

There’s good news and bad news.

The bad news is, the federal investment tax credit expiration is getting closer. But the good news is, the price of electricity continues to rise.

Wait, why is that good news?

Because solar power will continue to reward you with larger and larger offsets of your electric bill.

Even though your solar tax credit will be a bit smaller each year you put off installing solar on your residence, poultry farm, hotel, or other business, the money you’ll save will continue to increase as you avoid the ever-increasing costs of electricity.

Before we get into the details of that, here is the most current schedule for the Federal Investment Tax credit (ITC).

Federal Investment Tax Credit Schedule

Residential Solar 

For residences, the 30% solar tax credit expired at the end of 2019. 

The 26% tax credit expires at the end of 2020.

A 22% tax credit will take its place, and then expire at the end of 2021.

After that, unless Congress authorizes a new solar tax credit, residences will no longer have access to a federal tax credit for installing solar power.

There is no maximum tax credit. You can install as large of a solar energy system as you want, and you still get the same percentage tax credit. 

Commercial and Agricultural Solar

For businesses, including agricultural ones like poultry farms, the expiration schedule is the same, with one important difference:

After 2021, the ITC reduces to 10%, and stays there indefinitely. 

So while residences lose their access to a solar tax credit after 2021, businesses that go solar will continue to get a 10% tax credit.

Here’s more information about the commercial solar investment tax credit.

Rural Businesses Can Save More

For poultry farmers as well any other qualified rural small businesses (you might be surprised what counts as rural – find out if your business location might qualify by testing your address here), you can also apply for a REAP grant or loan through the US Department of Agriculture

Coastal Solar helps our rural commercial and agricultural clients work through the REAP application process. With a REAP grant, you can save up to 25% off on the costs of your solar installation. If you combine that with a 26% investment tax credit in 2020, you will be slashing your solar investment in half!

We have seen farmers recover their entire solar investment in under five years by taking advantage of these and other incentives we can explain as part of your solar quote.

Get a solar quote and consultation

If you apply for a REAP loan, instead of the grant, the loan can cover up to 75% of your costs, reducing your upfront expenses. See case studies and learn more about REAP grants and loans

Why Solar Continues to Be a Safe Long Term Investment

Even as the investment tax credit winds down, the cost of electricity continues to increase at alarming rates. Every year, most utilities raise their rates, some of them at more than the standard rates of inflation. Because utilities are essentially localized monopolies, you can’t do anything to stop them.

That’s why we say, “Own your power.” Generate your own power, and you escape the utility stranglehold.

Let’s assume your utility raises your rates at an average of 2% per year – a fairly conservative estimate.

If you spend $3000 on electricity this year and continue to use the same amount of energy every year thereafter, here is what you would pay to your power company assuming 2% annual inflation:

Over that ten year period, you will have spent an additional $3505 – just to use the same amount of energy you use today – if you continue to depend on the utility. That’s approximately a whole year of power you could get for free with solar, using this hypothetical example. 

But, if inflation goes up more than 2% (a strong possibility as the lower cost sources of energy become more scarce), your costs will increase even faster. And if you use more energy because of lifestyle changes, such as having more kids, moving to a bigger house, or expanding your business, your costs will rise even more.

Solar power is inflation-proof power. If you generate 1000 kWh per month, and use 1500 kWh per month, you will never have to pay more for that 1000 kWh generated by your solar system. What you pay for it today is all you will ever pay for it. The other 500kWh will increase in costs, but the 1000 gets offset. 

Back to the math – 

If you’re saving thousands just by avoiding inflation, and you combine that with the investment tax credit, and add to that what you’ll be saving every month from the power generated by your solar system, you will save tens of thousands of dollars – just in the first ten years – depending on how large a solar power system you install.

Don’t Wait – This Is the Best Year to Go Solar

But you have to decide this year if you want to get the maximum investment tax credit. The credit is expiring soon. You don’t have very long to decide. 

The sooner you go solar, the more money you will save because:

  1. You get the largest possible tax credit, and
  2. You start beating inflation sooner rather than later

And to be clear – this is a tax credit, not a tax deduction. A credit is far better, in case you’re not sure. 

A credit means, suppose your tax bill for the year is $10,000 and you have a credit of $6000. That would mean you only owe $4000 for that year.

A deduction just lowers your taxable income. So if you made $75,000 in income and had a $6000 deduction, your taxable income would now be $69,000. So you still save money with a deduction, but not nearly as much. 

The investment tax credit is not a deduction. It subtracts directly from the tax you owe. 

That means, that for up to 20 years after you go solar, you will get a massive tax credit!

Have More Questions? Talk to a Solar Consultant Today

Get a free solar quote by talking to a Coastal Solar consultant. Click the button below to find out what you can save by going solar.

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