Nowadays, a large number of people decide that they want to switch to using solar panels, and even the U.S. Department of Energy supports that idea. Investing in solar panel systems can be very expensive, so many might ask themselves, Are there tax credits if I go solar? Fortunately for them, there’s something called the federal solar investment tax credit. We’re about to find out what it means for everyone to switch to solar energy!
What is the Federal Solar Investment Tax Credit?
For people who invest in solar panels, we have great news! The U.S. Department of Energy provides credit to those who installed the panels based on a percentage of the cost of the photovoltaic system. The percentage depends on the year the solar panel system was set up, going from a 30% credit for those installed before the year 2020. Unfortunately, you’ll find that it decreases to 26% if the system was installed during 2020, and it’s going to decrease further to 22% until 2023.
The tax credit expires in 2024 for homeowners, so now might be the best chance to invest in a solar system! Businesses will be an exception, with their credit falling to 10% in 2024, and as it stands, it will stay that way. It’s a good idea to consult professional tax advisors for details regarding your personal setup. They might help determine the amount of credit you’ll be eligible for.
Claiming the Solar Tax Credit
Now that we’ve established that you can lay claim to a tax credit if you switch to solar energy, it’s important to work out how you’re going to do it. First of all, you need to check if you are eligible for a claim in the first place.
The requirements include a solar PV (photovoltaic) system installed between 2006 and 2023. It has to be located at your residence in the U.S. What’s more, you need proof you purchased it and are not leasing it, and it has to be an original installation of the solar equipment.
The expenses that will be included in the solar tax credit will be the PV panels, contractor labor for onsite preparation and assembly, and wiring. Energy storage devices like solar batteries powered by PV panels are covered as well! Some states might offer additional tax credits, so remember to contact an accountant or tax advisor for any specific questions.
Optimizing Your Investments Into Solar Energy
Once you dedicate yourself to an eco-friendly lifestyle, it’s important to research as many solar options as you can find. The U.S. Department of Energy thoroughly recommends you try and contact smaller businesses with lower installation prices since larger companies tend to inflate prices. As a homeowner, you can save from $5,000 to $10,000 on one installation.
As safe as large brands sound, that’s mostly due to their marketing. It’s important to consider all the options you researched before making your final decision. Even though it might seem tedious, it’s the best way to save yourself from financial trouble.
A variable worth taking into account as well is the efficiency rating of specific solar panels. Homeowners thinking about installing a PV system would be wise to take note of the type of roof they own. All of these factors eventually determine the amount of money you receive through the tax credit.
To the many asking themselves Are there tax credits if I go solar?, the answer is yes! However, it is crucial to invest a lot of time into researching solar panels before spending money on them. The more cost-effective the PV system you install, the more your investment will be profitable! Solar energy is the future, and now is the best time to consider switching to it, especially for homeowners.