One of the reasons why solar has exploded in popularity to the degree it has is because of a number of incentives and tax breaks that those who make the switch have been able to enjoy. There are hundreds or maybe even thousands of available incentives out there (depending on where you live, your living circumstances, and what kind of solar you install), but none are as widespread or all-encompassing as the federal investment tax credit. Otherwise known as the ITC, this tremendous incentive gives those who switch to solar the ability to deduct up to 26 percent of the cost they pay to install solar in their home from their federal taxes. This alone saved the average residential solar customer an incredible $5,000 on the cost of going solar in the year 2019.
The federal ITC was a far-reaching program, covering almost any type of solar electricity generation system. Both residential and commercial customers qualify for the ITC, and there is no cap on the value that can be claimed. The larger the system you install, the bigger the amount you could claim on your taxes.
The Sunset Process
However, the program’s extended expiration date is coming quickly, and soon the sunsetting process will begin. Starting on January 1st, 2020, those who install a solar energy system will only be able to claim up to 26% of the cost of their solar energy system on their taxes, and in 2021 that number will drop to 22%. In 2022, the credit will disappear entirely for residential customers, and commercial customers are limited to a permanent cap of just 10 percent.
What does that mean for you? It means time is running out if you haven’t switched to solar yet. In order to take advantage of the full 26% solar ITC and get the maximum benefit on your taxes, you must sign the contract to begin your solar transition before December 31st of this year. The construction and installation of your system does not need to be completed before this date—you only need to have purchased your system and signed your contract for it.
Eligibility for Other Incentives
One of the other big things that has made the ITC so popular is that it doesn’t impact your ability to be eligible for other benefits, such as grants, credits, and other tax incentives which may be available on a state or local level. Because the program is on a federal level, it’s unaffected by state laws, which means nearly anybody across the country could benefit from it. And with a little bit of research and guidance from a local solar expert, you could find many other incentives which could help bring the cost of your solar energy system down even further.
We encourage anyone who is considering switching to solar to reach out to us as soon as possible to start learning more about available incentives. If you truly want to maximize your savings and take advantage of the ITC at its fullest, the time to do so is running out extremely fast.
Learn more about transitioning your home to solar by calling PurePoint Energy at (203) 989-2905 today.