Ok, the days of the 30 percent federal tax credit are officially over when it comes to installing a home solar system. But, that doesn’t mean that you should forget about purchasing a new system. In fact, there are still substantial savings to be had. In 2020, you can still obtain a 26 percent savings on purchase and installation costs.
Officially called the Residential Renewable Energy Tax Credit, this form of federal tax savings is an attractive way to still save on the cost of installing a home solar system. Here’s how to take advantage of this tax break.
Getting the Federal Tax Credit
To receive the Renewable Energy Tax Credit, you must subtract the credit amount from the total tax the IRS says you have to pay. And there’s no limit on the price of the system you choose to install. This is a different type of savings than a standard tax deduction which reduces the amount of income you pay taxes on. Instead, you get a dollar for dollar credit regardless of your tax rate. And if you can’t use all the credit in one year, you can carry it over for later years.
- The entire bill for a qualified system, minus the sales tax. This includes solar panels, onsite preparation and installation, as well as piping or wiring to connect the system.
- Can be purchased in cash or with a loan.
- Solar roofing tiles, such as those manufactured by Tesla, are acceptable.
- Solar must be installed in a property that you live in for at least part of the year.
- Solar installed in an income property that you don’t live in.
- A leased system
- A system that is used to heat a swimming pool or hot tub.
Don’t Forget the State Tax Credit
Here, in Arizona, you also gain the added benefit of a state tax credit up to $1,000. For more details on state and federal tax credits, as well as discounts and rebates, contact Cool Blew Solar today!