The benefits of solar energy do not stop at helping the environment. There are a variety of economic benefits and incentives for residential and commercial solar panel energy, including the Federal Income Tax Credit. This incentive can help you save a lot of money each year for your solar panel array.
As a solar energy solutions company, Prospect Solar is here to help you understand the economic benefits and incentives of solar energy. If you are considering making the switch to solar, make sure you understand the basics of the solar investment tax credit and if you are eligible.
What is the Solar Investment Tax Credit?
The federal solar investment tax credit (ITC) can be claimed on your federal income taxes for up to 30% of the cost of your solar panel array. You enjoy this credit in the same tax year as you have your solar panels installed. This credit is dollar-for-dollar, so whatever tax credit you earn from your solar panels is how much your federal income tax is reduced. There is no limit to how much of a tax credit you can receive.
The tax credit was recently renewed through 2021. If you install your solar panels in 2017, then you will receive a tax credit for 30% of your solar panel cost on your 2017 taxes when you file in April of 2018. The tax credit remains 30% through 2019, then drops to 26% in 2020, 22% in 2021. In 2022, only commercial solar arrays are eligible for a 10% tax credit; residential tax credits will no longer be available.
How Do I Know if I’m Eligible?
If you installed a solar photovoltaic system in the same year as your intended tax year, you should qualify for this credit. You must have your system installed between January 1 and December 31 of that year. In most cases, your system may not need to be fully installed and functional in order to receive the tax credit. As long as construction has started on your installation, you should be able to claim the credit in that same tax year.
You must own the solar array yourself to claim the credit, having either paid for it all upfront or using financing options. You cannot rent a solar panel array and be eligible for the tax credit. Both residential and commercial locations can qualify for the ITC. You can only claim the tax credit once, but you are eligible to claim the credit for as long as you own the system; if you do not have enough tax liability to claim it one year, you can claim it in another.
Earn Your 2017 Solar Investment Tax Credit!
Time is running out to install a solar panel array and earn a tax credit in 2017! To make the switch to solar energy for your home or business, contact Prospect Solar! We offer residential and commercial solar panel installation in D.C., Northern Virginia, and Maryland. We are dedicated to spreading awareness of the economic and environmental benefits of solar energy, and are happy to walk you through each step of your solar panel installation process.