Solar Financial Incentives
There are quite a few reasons to install a solar energy system at your property. It delivers sustainable power, helps move toward energy independence, and protects the environment for future generations.
Solar Energy Benefits
The benefits of solar energy include more than just savings on your electrical expenses, however. Home and business owners can take advantage of federal, state, and local incentives to pay off a system more quickly, and start making money earlier. These include:
Some solar incentive programs pay you back over time, based on the energy generation. Others are one-time payments of rebates or credits. Here’s a look at the perks available to solar energy system owners.
Federal Solar Investment Tax Credit
The federal government provides a solar tax credit, known as the Investment Tax Credit or ITC, that allows home and business owners to deduct a portion of their solar costs at tax time.
Both home and business owners qualify for the federal tax credit equal to 30% of the cost of their solar panel system, minus any cash rebates, through 2019. It also has no value cap.
Solar energy system owners are only allowed to claim the credit. This is why Speed Solar discourages solar energy system leasing.
The tax credit is a dollar-for-dollar reduction in the income taxes that a person or company would otherwise pay the federal government. It’s based on the amount invested in solar property, and eligible property owners can claim the investment tax credit for solar when filing yearly federal tax returns.
The greater the cost of a solar energy project, the larger the tax credit. Make sure to document every expense and keep all receipts. Claimable expenses include:
Prospective solar energy system buyers aiming to take advantage of the federal tax credit should act sooner rather than later. Below is a breakdown of the percentage of a solar system cost that new residential and commercial solar system owener are able to deduct from their taxes in the upcoming years:
Commercial and utility-scale projects for which construction begins before December 31, 2021, may still qualify for the 30, 26 or 22% tax credit, if they go into service before December 31, 2023.
For more information on federal tax credits, visit www.seia.org.
The Internal Revenue Service offers a review of solar energy incentives here: www.irs.gov/newsroom/energy-incentives-for-individuals-in-the-american-recovery-and-reinvestment-act
In addition to federal tax credits, incentives for photovoltaic systems are also available through state governments. Every state has its own program, and each one offers different solar energy rebates.
The Database of State Incentives for Renewables and Efficiency, or the DSIRE, has a comprehensive list of solar incentives by state. It also has information and maps covering solar policies across the United States of America.
Local authorities, counties, cities, utility districts, and organizations trying to promote solar energy usage occasionally offer cash rebates. These rebates are usually available for a limited time and end once a certain amount of solar panels are installed. These incentives can help further reduce overall system costs by 10-20%.
The top way to learn about locally offered incentives is to contact leaders, civic associations, installers, and advocacy groups in your area.
Some parties may be eligible to finance solar energy system purchases using a subsidized solar loans, which typically have lower interest rates than conventional loans.
These loans may be offered by states, non-government organizations or utility companies, and they are usually available for a limited time.
Some states and municipalities don’t include the value of solar energy systems in property tax assessments. This means the addition of a solar energy system will not bump up a property tax bill, despite the fact the system itself may have increased the property’s value.
Also, some states exempt solar energy systems from state sales tax obligations. This can lead to substantial savings, depending on the state’s sales tax rate.
Combining federal tax credits with any state and local incentives you qualify for may significantly reduce the short- and long-term costs of a solar energy system.
Make your move toward a cleaner planet and a lower energy bill with Speed Solar. Our expert team can advise home and business property owners in the Midwest about their options.