September 19

Is It Too Late To Get A Solar Energy Tax Credit?

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When Congress okayed the nation's spending bill for 2016, they included a five-year solar tax credit extension. It's unclear what President-elect Trump's policy will be towards these types of tax credits, but it would take an act of Congress to change what is already in place. That's great news for homeowners, as well as for solar energy companies. Even if Mr Trump brings back cheap coal, solar tax credits will help keep alternative energy affordable for more Americans.

What does the solar tax credit mean?

The tax credit will show up on your tax forms as “investment tax credit.”   The ITC lets you deduct 30% from your federal taxes of the installation cost of a solar energy system. The tax credit can be used for either residential or commercial systems, with no limit on the price tag.

Here is an excerpt from an Energysage.com article, summarizing the timeline for the solar tax credit:

The federal ITC was originally established by the Energy Policy Act of 2005 and was set to expire at the end of 2007. A series of extensions pushed the expiration date back to the end of 2016, but experts believed that an additional five-year extension would bring the solar industry to its full maturity. Thanks to the spending bill that Congress passed in late December 2015, the tax credit is now available to homeowners in some form through 2021. Here are the specifics:

  • 2016 – 2019: The tax credit remains at 30 percent of the cost of the system. This means that in 2017, you can still get a major discounted price for your solar panel system.
  • 2020: Owners of new residential and commercial solar can deduct 26 percent of the cost of the system from their taxes.
  • 2021: Owners of new residential and commercial solar can deduct 22 percent of the cost of the system from their taxes.
  • 2022 onwards: Owners of new commercial solar energy systems can deduct 10 percent of the cost of the system from their taxes. There is no federal credit for residential solar energy systems.

Additionally, in previous years, owners of new solar energy systems could not claim the tax credit unless their system was operational. Now, the legislation allows them to claim it as soon as the construction of the system begins, as long as it is operational by December 31, 2023.”

To read the complete article please go to energysage.com.

In case you're wondering whether you qualify for this tax benefit, all you have to do to be eligible is to own a solar energy system. Leasing doesn't count. Please don't rely on the information presented here, however. As with all tax matters you should consult with a CPA or other tax professional.


Tags

solar energy, solar tax credit


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