Going solar is not a choice you make overnight. Property owners often consider numerous factors before making the switch. Among those factors is the installation cost of solar systems.
These installs are costly, but they don’t have to be. You can now afford solar energy through the different government cash incentives.
1. Investment Tax Credit
This federal income tax credit is the best option for both residential and commercial solar energy owners. The US Internal Revenue Service (IRS) deducts the cost on the homeowner’s taxes. Moreover, homeowners are granted a 26% deduction for solar system projects done in 2020-2022. This will later decrease to 22% in 2023 and decline to 0% from 2024 onwards.
Additionally, unused solar tax credits can be carried over. These can be used within the next 5 years from your purchase date. It simply means that if you have a $4,000 unused credit from your 2020 tax liability, you can apply this incentive to your taxes until 2025.
To claim the full tax credit, the property owner must meet the requirements listed below.
A. One must be a taxpayer.
B. The taxpayer should purchase the solar system with cash, loan, or PACE (Property Assessed Clean Energy).
C. The purchased solar system must be used and identified by the IRS as “placed in service” before the end of the year to avail of the 26% (2020-2022), 22% (2023), or 0% (2024 onwards) tax credit .
D. The home owner’s personal solar panels should power the energy storage systems available within the household or building.
2. State Tax Credits
State tax credits could add up to a significant decrease in your state taxes, especially when paired with the federal ITC.
3. Cash Rebates
You can get incentivized for installing a solar panel system. These limited-time rebates often reduce system costs by 10% to 20%. Since cash rebates are dependent on your state, region, and utility company, incentives may vary.
4. Solar Renewable Energy Certificates (SRECs)
This state-level solar incentive, also known as Solar Renewable Energy Credit, issues Solar Renewable Energy Certificates (SRECs) to your solar power systems. These certificates are issued to those who comply with state-level renewable energy requirements. The amount of electricity produced by your solar energy system becomes the basis of your certification. Once you are certified, you are qualified to sell your SREC to local utilities.
5. Performance-Based Incentives (PBIs)
Performance-Based Incentives allow you to get paid per kilowatt-hour credit for the actual electricity produced by your solar system.
OTHER INCENTIVES FOR SOLAR
1. Solar Incentives for Businesses: Accelerated and Bonus Depreciation
If you’re a business owner, you can reduce your businesses’ taxes through the Modified Accelerated Cost Recovery System (MACRS). As a result, depreciation is accelerated and the net system cost is reduced to about 30%. Cost reduction can further increase based on MACRS tax benefit offers of the state you belong to, if applicable.
2. Subsidized Loans
You may avail of solar loans with a reduced interest rate. However, this type of solar incentive may only be offered for a limited time so it’s best if you apply for a loan now from your state, a non-government organization, or your utility provider.
3. Tax Exemptions
There are some states that exempt solar panel systems despite the added value to your property. This can result in additional savings and reduced costs.
Going solar is definitely the best choice for homeowners or businesses who do not only want to lower their electricity bills but also want to maximize their investment. Reduction of your solar system’s overall costs is made possible by these solar tax credits. Although solar energy installs may require you a significant amount of money, they will benefit you in the long run.
When considering a solar system install, make sure you are getting the most for your investment. The Home Pros US is an excellent source for competitive pricing on quality systems. Go solar now and get aggressive cash incentives for your Solar Energy Installs from State & Fed Tax Credits, Performance-Based Incents, SRECs and more. Click the “Free Quote” button to get a free estimate and get the assistance you need from a local professional!