With the dreaded April 15th tax filing deadline looming, we wanted to remind homeowners of a tax incentive that can save them substantially in the coming year. It’s the federal solar tax credit, also known as the Solar Investment Tax Credit or ITC, and it’s the most substantial solar incentive available to taxpayers. This direct tax credit of 30% of the cost to install a solar system is given to the system’s owner in the year after installation.
While this tax credit is valuable, it’s important to know that it’s coming to an end soon. Solar installations completed after December 31st, 2019 will not be eligible for the 30% tax credit. In 2020, the credit drops to 26%, For 2021, it becomes 22%, and in 2022, homeowners will no longer be eligible to obtain this credit.
How to Take Advantage of the Solar Tax Credit
The ITC is a non-refundable tax credit. This means that you have to owe at least as much in taxes as the credit would be. To take the full tax credit in the year after installation, you’ll need to owe at least 30% of the cost of your solar installation. If you don’t owe that much in taxes, you can still take the full credit, but will need to space it out over the course of more than one year.
On your tax return, you’ll use Form 5695 Residential Energy Credits to claim the tax credit. You’ll also need the receipts for your solar installation.
Remember, this credit is going away soon. So, if you’ve been contemplating going solar, 2019 is the year to make a decision. At Cool Blew Solar, we’ll provide you with all the details on the Federal Solar Tax Credit, as well as other incentives to save you money on the installation of a new solar system. Call us today for more details.