Solar installations skyrocketed by 46% at the beginning of 2021 across the United States.
New solar panel owners enjoy cheaper utility bills while creating a more sustainable future by combating climate change. If that weren’t enough, they also get to take advantage of significant tax savings.
When you combine all of these benefits, installing solar panels on your home seems like a no-brainer. But how do you ensure you get the most bang for your buck?
Here is a breakdown of the federal solar tax credit and how you can benefit from it.
What Is the Federal Solar Tax Credit?
The federal government has dedicated funds to offset the cost for Americans to install solar panels on their homes. The Investment Tax Credit (ITC) is a dollar-for-dollar reduction in how much you’ll owe in taxes if you install panels on your home.
Homeowners that install solar panels in 2021 or 2022 can receive a 26% tax credit. If you wait until 2023, the solar tax credit will be reduced to 22%. The program is slated to end in 2024, with a 10% credit.
If you get your solar panels installed soon, your total cost will be only 74% of the real cost of installation. When you factor in state tax incentives and reduced energy bills, solar panels more than pay for themselves.
Check out https://blueravensolar.com/blog/how-much-do-solar-panels-save/ to get a closer look at how much money you’ll save.
How to Qualify
Don’t leave your savings to chance. Check out the guidelines in advance to be sure that you’ll qualify for the tax credits.
For instance, the installation must be fully completed within the tax year. That means if you don’t finish the installation until 2022, you’ll need to file for the credit with your taxes in April of 2023.
Next, the solar panels must be installed on your primary or secondary residence. Or it may be for an off-site community project. Those who own rental homes should check into the business tax credits for solar power.
You must also own the panels via outright purchase or financing and not be leasing them. The solar equipment is also required to be new to qualify for the credit. As always, check with your tax professional when filing.
What It Covers
The federal tax credits cover most of the costs associated with your solar panel installation. This includes solar PV panels and cells, balance-of-system equipment, and energy storage devices as long as they solely store solar power.
Labor costs are also included. Any costs associated with inspections, permitting, or assembly are covered. You can also include sales tax in the total.
Make the Federal Solar Tax Credit Work For You
The federal solar tax credit is just one of several ways that solar panels can benefit you financially. You’ll be able to say goodbye to high energy bills and help contribute to a more sustainable future for all.
Homeownership is a big responsibility. But with the right tips, you can save money where it counts. Check out our other tips today!