It is still possible to benefit from the tax credit associated with “Going Solar!!!”
The solar Investment Tax Credit (ITC) is one of the most important federal policy mechanisms to support the growth of solar energy in the United States. The ITC is a 26 percent tax credit for solar systems on residential and commercial properties. Congress passed a two-year delay on the phase down of the ITC in December 2020.
The ITC is currently a 26 percent federal tax credit claimed against the tax liability of residential and commercial and utility investors in solar energy property. The residential ITC allows the homeowner to apply the credit to his/her personal income taxes. This credit is used when homeowners purchase solar systems and have them installed on their homes. In the case of the commercial ITC, the business that installs, develops and/or finances the project claims the credit.
A tax credit is a dollar-for-dollar reduction in the income taxes that a person or company would otherwise pay the federal government. The ITC is based on the amount of investment in solar property. Both the residential and commercial ITC are equal to 26 percent of the basis that is invested in eligible solar property. The ITC then steps down according to the following schedule:
• 26 percent for projects that begin construction in 2021 and 2022
• 22 percent for projects that begin construction in 2023
• After 2023, the residential credit drops to zero while the commercial credit drops to a permanent 10 percent
If you are considering any form of residential improvement or commercial facilities upgrades, an energy audit will help determine the financial benefits of Going Solar!!!