Many of the homeowners we meet throughout Phoenix and Tucson have heard about the available tax savings of going solar. But here at Energy Solution Providers, we still get a lot of questions, like “How does the Federal solar tax credit work?” and “What does a 26% tax credit mean?”
Why is the Federal Solar Tax Credit So Important in 2021?
This government tax incentive program can greatly reduce the cost of your solar installation, but it won't stick around forever. Although the Federal Investment Tax Credit (also known as the ITC), was extended at the end of 2020, it will continue to decline and will be completely eliminated by the year 2024 for homeowners. Following the extension, the federal solar tax credit will step down over the next few years as follows:
2021: 26% tax credit
2022: 26% tax credit
2023: 21% tax credit
2024: 0% - tax credit is eliminated for residential systems, but remains at 10% for commercial solar installations.
So you may be wondering, “How do I qualify for the solar tax credit?”
Qualifying for the Federal Solar Tax Credit
The Federal solar tax credit allows homeowners to reduce 26% of the total costs related to their solar installation from what they owe on their federal taxes due. But in order to qualify for that 26%, your solar installation must be installed before by December 31, 2022. For commercial installations, the installation must have begun before the end of the 2022 and this is defined as physical work related to your installation, or as a payment of 5% of the total installation cost.
In order to qualify, you must also:
*If your solar tax credit exceeds your federal tax liability, the Federal ITC does allow for one year of carryover for the remaining, unused deduction amount.
Once we wrap up the installation of your carefully designed solar PV system, our solar experts will help you to add up your qualifying installation costs, so you can reduce the maximum amount on your taxes come April.
Reducing the Cost of Solar Installation
When you partner with Arizona’s trusted solar experts at Energy Solution Providers, we will not only help you to qualify for the tax savings offered by the Federal ITC, but we can also help you to navigate the SRP solar rate changes, qualify for any available utility rebate programs, finance your solar installation, and identify any other money saving programs that can reduce the cost of your installation. These reasons are why it is so important to trust a solar contractor with local expertise when it comes to harnessing the renewable Arizona sunshine.
The lower your solar installation costs, the quicker your payback period. And the sooner you can offset the cost of installation, the sooner you can profit from the energy savings your solar PV system provides! We design systems that will last for decades, so you can rest easy knowing that your investment in solar will provide a financial return and can even increase the value of your home!
Curious about the tax savings that accompany your solar installation? We’ve got all the details you need! Energy Solution Providers is ready to answer your questions. Call us at 520-868-0700 or contact us today.