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Database of State Incentives for Renewables and Efficiency

Click on this link which will bring up the USA Map. On the map just select your state which will show you all the available tax breaks and incentives for your location.

The Federal Solar Investment Tax Credit

The Solar BiZ engineers are solar experts, we are not tax accountants. Below are the general guidelines for the Federal Solar Tax Credit, but in the end, you will need to consult with your Tax Professional to determine if you qualify for the tax credit.

The current federal solar tax credit has been extended and is, as of now set to expire, in 2024. Homeowners can use this federal tax credit for battery storage, installing new systems, and more.

Currently when you install a solar power system between 2021 and 2022, the federal government allows you to claim a 26% income tax credit for investing in solar energy. This means, 26% of your total project costs, including all the equipment, permitting and labor for installation, can be claimed as a credit on your federal income tax return for that year. This credit is a dollar-for-dollar reduction of the income tax you owe.

This credit is NOT a refund, you have to owe taxes to claim the credit. But since most folks do owe taxes, they will end up being eligible for the Federal Solar Tax Credit.

How Much Can I Save?

Right now, the Solar Investment Tax Credit (ITC) is worth 26% of your total system cost. This includes the total value of the equipment, permitting  and contractor bill for the installation.

Here is a catch. You are only allowed to claim the credit if you own your system. There are a lot of out-of-work used car salesmen running through neighborhoods selling folks on Solar Leasing, do not do a lease if you can avoid it. If a company leases you your system, they still own the equipment, so they get the Tax Credit money, not you.

If you cannot afford the upfront cost to go solar why not finance the system? This way  you get the Federal Tax Incentives that make solar such a great investment.

Some Facts Regarding Eligibility of the Federal Tax Credit:

  • The home served by the system does not have to be the taxpayer’s principal residence.
  • If the federal tax credit exceeds your tax liability, the excess amount may be carried forward to the succeeding taxable year.
  • There is no ceiling on the tax credit.
  • Applies to equipment AND installation costs.

For Residential Renewable Energy Systems, use IRS Tax Form 5695 to report your expenses. (It can be used for any residence, not just your primary one.) Learn more about residential tax credits. Commercial systems have similar guidelines as residential systems but use IRS Tax Form 3468. Click on the DSIRE Link above to lean more about commercial tax credits.

 

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