Every thing you need to know about the Federal ITC
What is the Federal ITC?
Solar Tax Credit
The federal investment tax credit, AKA the federal solar tax credit, allows individuals and businesses to deduct 30 percent of the cost of installing a solar energy system from your federal taxes.
What does the Federal ITC mean for the price of solar?
Thanks to the spending bill that Congress passed December 2015, the tax credit is now available in some form through 2021. This bill is making solar more attainable and attractive to Americans and is bringing the solar industry into maturity. 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.
How do I know if I qualify for the Federal ITC?
As long as you own your solar energy system, you are eligible for the solar tax credit. However, remember that if you sign a lease or PPA with a solar installer, you are not the owner of the system, and thus you cannot receive the tax credit.
Claiming your credit:
Just claim your solar tax credit when it is time to file your yearly federal tax return. Remember to let your accountant know you’ve gone solar in the past year.
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