In 2015, Congress extended the solar panel tax credit by five years. Guess what? That extension is coming to an end. And, if you’re contemplating going solar, this may impact you.
What Is the Solar Tax Credit?
The federal solar tax, also called the investment tax credit (ITC), enables you to deduct 30 percent of the cost of a solar energy panel system installation. This federal tax credit is good for both commercial and residential solar systems with no cap on its value.
While this tax credit is a valuable opportunity for homeowners and business owners alike, it’s coming to an end over the next several years. Here are the details:
- The tax credit is 30 percent of the cost of a system through the end of 2019.
- The tax credit drops to 26 percent in 2020.
- The tax credit drops to 22 percent in 2021.
- From 2022 onwards, the tax credit drops to 10 percent for commercial solar systems, and there will no longer be a federal credit for residential systems.
Will You Qualify for the Credit?
If you purchase a solar energy system, you will qualify for a tax credit through 2021. It’s also important to remember that if you lease a system, you are not the owner of it and will not quality for the credit.
How to Claim the Credit?
To receive your credit, you’ll need to claim it on your federal tax return using Form 5695. Start by reading the instructions on the form to determine your eligibility. Then, complete the form to validate your qualification for renewable energy credits. After that, you’ll add your renewable energy credit information to your standard 1040 form.
Want to Learn More?
With evolving credits, rebates and discounts, it’s important to get up-to-date information from a solar expert. That means calling Cool Blew Solar at 623-234-2836.