The Window to Receive Maximum Tax Credit on a Solar Purchase Is Closing Soon
The investment tax credit (ITC) is also known as the federal solar tax credit. It allows you to deduct 26 percent of the cost of installing a solar energy system from your federal taxes. The ITC applies to both residential and commercial systems, and there is no cap on its value.
Economic attractiveness, increased ambition at the federal level, and federal tax credits become the fuel for the growth of solar energy in the United States.
While solar installation is going to drastically reduce one’s electricity usage and subsequently, their bills, there are certain things to know any business or household should consider before going solar. They are as follows:
Electricity Bill
Those numbers in your energy bills are vital. they will help you to understand what your payback would look like. We will crunch them so that you can get a clear picture of what makes the most sense for you.
Believe us, any solar energy company worth your time won’t install a system for you without helping you understand exactly what your bill and return on investment would look like with all your unique variables. Hence the electricity bill.
Subsidies/Rebates
Solar isn’t always fully affordable however thanks to state subsidies and federal rebates, now it is well within the reach of small business owners and most of the time homeowners too.
Solar ITC was originally enacted in 2006 and was set to expire by 2007. Thanks to its popularity and its success in supporting the United States’ transition to a renewable energy economy, Congress has extended its expiration date multiple times, including most recently in December 2020. Credits for tax years 2020, 2021, and 2022 are set at 26% and is scheduled to fall to 22% in 2023.
Although 26% ITC is available till December 2022 however choosing the right product for your custom need and designing as well as the construction of the same takes a reasonable amount of time. Hence your time to act is now!
How Does the Solar Investment Tax Credit Work?
A tax credit is a dollar-for-dollar reduction in the income taxes that you or your business would otherwise pay to the federal government.
If you or your business are eligible for the ITC, but you don’t owe any taxes during the given calendar year (for any reason), the IRS will not refund you with a check for claiming the credit. The 26 percent ITC is not refundable. However, the ITC can be carried back one year and forward 20 years. Therefore, if you had no tax liability last year or this year, you could still use the credit any time you have liability over the next 20 years.
But remember to claim 26% ITC, construction of your Solar PV System must start before 2022 ends.
Clock is ticking
Starting your solar project now not only means you will start saving on your electric bill sooner than later, but it will help you avoid the mad dash as the ITC and other incentives age out. Of course, extensions like what happened in December 2020 are certainly possible, but you shouldn’t count on them.
As Benjamin Franklin said, “You may delay, but time will not.” Right now, is still the best time to go solar that there has ever been, but the year moves quickly, and soon the 26% federal solar tax credit will step down to 22%, and in 2024 it will be gone altogether for homeowners. Getting your solar project started now will make sure that you are up and running in time for those high-producing, hot summer months and qualified for complete 26% Solar ITC.
Contact us today.
Staten’s solar experts are here to walk you through the possibilities and put together a plan that helps you use the tax credit to your advantage. Get in touch today to talk about how solar can help your business meet this moment with a stable, low rate for your energy and a solid investment in your property. Call us at (408) 780-2889 or click here!
