How Much Can the Solar Investment Tax Credit Save Me?
Federal Solar Tax Credit Saves Thousands for Customers through 2021 (and beyond for businesses)
The solar Investment Tax Credit, also known as the Renewable Energy Tax Credit, saves businesses, homeowners, and farmers 30% off their solar installations. But only for a limited time.
Here are a few helpful facts about the Investment Tax Credit as you decide what size solar energy system to buy:
- No cap – the value of the ITC is limitless. It’s 30% of the total costs, even into the millions for large commercial systems
- Includes all costs of installation – not just the panels themselves. Wiring, inverters, racking, labor – it all counts. Consult your tax professional for details.
- Reduces to 26% in 2020
- Reduces to 22% in 2021
- Set to expire after 2021 – for homeowners
- Reduces to 10% in 2022 – for businesses, and stays there indefinitely
- Applies on the date construction of your solar array begins, not the day it’s completed
- You must own your system – if you have a Power Purchase Agreement or other type of solar lease, you cannot claim the ITC
The ITC is like getting a 30% off coupon, except in the case of solar that coupon is worth many thousands of dollars. If you installed a solar array for $30,000, the ITC would reduce your bill to $21,000, right off the top.
For a bigger commercial solar installation costing $1 million, the ITC would reduce that to $700,000. When your power bills are tens of thousands per month, it won’t take long to recover what will look like a small investment twenty years from now.
Many states and utility districts offer additional solar tax credits and other ways to save on your installation, so look into your local tax benefits and you might save even more.
In Georgia, for instance, here are several solar power tax incentives in the state of Georgia. These are separate from federal solar power tax incentives.
The benefit of the renewable energy Investment Tax Credit is clear – it shortens the time it takes for you to reach a positive ROI on your solar installation. Saving thousands of dollars up front can slash the time to break even by several years.
Will the ITC really expire in 2021?
It’s hard to say, since Congress has already renewed and extended the Investment Tax Credit more than once, and may do so again. However, much of that depends on the politics of the moment as well as the demands of voters and businesses.
The most important thing to know is that if the current situation holds, installing a solar energy system before 2020 hits, when the ITC begins to decline, is your single best option. Waiting and hoping on Congress isn’t what most people consider a wise business plan.
So if you’ve had an interest in going solar at some point, you should make the decision before 2020 hits, and certainly before 2022 if you’re a homeowner.
What’s the impact of the ITC on solar energy?
Current estimates project about 25 gigawatts of solar capacity will be installed in the US between 2017 and 2020, bringing the total installed to over 100 GW. This will result in tens of billions of savings from the Investment Tax Credit for businesses and homeowners.
And the number of jobs in the solar industry being supported by this, as well as the environmental benefits from the reduced usage of fossil fuels, makes the ITC good for just about everyone. It injects money into a booming business sector, cuts millions of pounds of carbon dioxide and other air pollutants from being produced every year, and best of all, helps more homes and businesses save big on their power bills.
The long term benefits of this solar tax credit provide value to everyone, even people who don’t own solar panels.
How do I qualify for the Investment Tax Credit?
You must own your own solar power system. You cannot be leasing it, or be a renter. But as long as you own the home and begin construction before the end of that year, you qualify for whatever percentage tax credit is listed.
Also, if your credit is greater than the amount of tax you owe, you can roll over the leftover credits to next year.
To claim the ITC, you can do so on your regular federal income taxes. For more information on the ITC, visit, the Department of Energy web page that applies to you:
If you want your solar tax credit this year so you can lock in your long term energy savings before the ITC changes, the best first step is to request a free solar quote. To get a quote from Coastal Solar, you’ll need to send us your last 12 months of power bills. You can do that on this page.
Take advantage of a huge solar tax credit while it’s still here, and start saving big money on your power bills.