One of the many benefits to installing a solar panel system on your home is that the federal government will help you pay for it in the form of a solar income tax credit. It works by allowing you to deduct a percentage of the total cost of your system off your federal income tax obligation. Currently, that rate is 26% but, is scheduled to decrease to 22% next year.
To put this in perspective, let’s do a comparison. Suppose you purchased and installed a solar panel system from Shine this year that cost $25,000. A 26% federal income tax deduction would equal $6,500. If you bought that same system next year, you’d only be able to deduct $5,500. That’s $1,000 of free money you’re leaving on the table!
So, what happens if you don’t owe that much in taxes? Well, the IRS won’t be sending you a check, but they will allow you to carry over the difference as a deduction until used in full for up to 20 years after installation. Either way, you'll be saving the full amount. Be sure to ask your tax professional for further details on how best to apply this to your financial situation.
Unfortunately, the solar tax credit will expire in 2022, which means that unless Congress renews it, you will be missing out on some big savings. So, if you’re considering installing a solar panel system on your home, be sure to act fast to take advantage of the maximum tax credit available! Call Shine today at 844-80-SHINE or visit our website at www.shinesolar.com for more information.
Isn’t This A Federal Subsidy?
Yes, the tax credit is a temporary subsidy. But what isn’t? There are many industries in this country that are subsidized by the federal government on an ongoing basis. Some of them include the oil and gas, farming, housing and automotive industries, to name a few.
Federal subsidies are not free handouts. They come in many different forms and are specifically directed to help some industries hedge against insurmountable financial obstacles that would otherwise block innovation, growth and progress, which benefits all of us.
In the solar industry, the federal tax credit is meant to help solar grow and develop as a clean, alternative energy source that is affordable for most American homeowners. Moreover, it is temporary. Once solar has achieved this goal, the tax credit will end, just as it is scheduled to do in 2022.
It’s Been Highly Successful
Solar was once very cost prohibitive and inefficient. However, thanks in part to the federal tax credit, solar prices have dropped 70% since 2010 and the technology has improved so much that customers can now sell power back to their electric utility. This has translated into an average annual growth rate of 52% and has created hundreds of thousands of good paying jobs while pouring over $140 billion worth of investment into the U.S. economy. None of this would have been possible without the help of the solar tax credit.
In short, the solar tax credit has been a critical part of developing the solar industry. Far from being a free handout at taxpayer expense, it’s served as a vital hand up and helped establish a new industry, which provides jobs and allows homeowners to own their own clean energy supply instead of being shackled to the power company. What could be more American than that?
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