With the IRS expected to receive over 168 million individual tax returns by April 18, you’ll want to make certain to take advantage of federal and state of Arizona solar tax credits. These credits allow qualifying homeowners to save money by going solar. Let’s take a look at some of the key insights you’ll want to be aware of.
Federal Tax Credit
Individuals can purchase and install a solar energy system and claim 30% of the investment in green energy as an investment tax credit (ITC). Meaning you’ll be able to claim almost one-third of the total cost of equipment including installation costs. Passing the Inflation Reduction Act (IRA) in 2022 allowed the tax credit to be retroactively applied to anyone who installs their home solar system in 2022 through 2032.
The Department of Energy requires homeowners to meet all of the following requirements:
- You must own your home.
- Your federal tax liability must be sufficient to apply for the 30% tax credit.
- You must own your solar panels and, if applicable, the energy storage battery system.
- What’s covered by the solar tax credit:
- Purchase cost of solar panels.
- Installation costs, including labor, permit fees, inspection costs, and developer fees.
- Solar equipment such as wiring, inverters, and panel mounting hardware.
- Any taxes paid on eligible solar equipment expenses.
- Energy storage systems rated three kWh or greater starting in 2023.
You’ll want to seek professional tax advice first. Then, complete IRS Form 5695 Residential Energy Credits and file it with your yearly federal income tax return.
State Tax Credit
If you installed solar energy devices, including panels and solar storage systems at your home in Arizona, the tax credit is 25% of your solar energy device cost, up to $1,000. Form number 310 is the form to complete to claim the tax credit.
Considering the long lifespan of solar panels, some panels are warrantied for up to 40 years, the low amount of servicing and repairs needed, going solar is well worth the upfront costs. With government and state tax incentives, solar energy is now more affordable than ever. They’re an excellent investment in your family’s future and the future of our planet.
At Cool Blew Solar, we’ll provide you with all the details on the federal solar tax credit and the state of Arizona tax credit. Call our professionals today at 1-623-234-2836 for a free solar power installation estimate. Solar energy is clean, green, and earth friendly.