On August 12th, 2022. The Inflation Reduction Act made a historic down payment on deficit reduction to fight inflation, invest in domestic energy production and manufacturing, and reduce carbon emissions by roughly 40 percent by 2030. Most homeowners may not know they qualify for the solar tax credit. The biggest reward you'll get by converting to solar electric power is tax benefits. All levels of local, state, and federal governments support the move towards renewable, clean, and efficient solar power.
What is a Solar ITC?
The ITC “Investment Tax Credit (ITC)” is the federal tax policy that allows residential and commercial solar system owners to deduct some of their solar installation costs from their taxes. The solar ITC is the primary financial incentive to go solar in the U.S. Currently the Federal Investment Tax Credit (ITC) has now been increased to 30% till 2033. The ITC decreases to 26% in 2033, and 22% thereafter until 2035 when the credit is gone completely.
This United States federal government tax relief allows you a 30% rebate on the overall cost of your solar power system. For instance, if you invested $50,000 in your solar panel installation, you're entitled to receive a $15,000 tax credit. As well, there is no cap on the program so you can invest as much as you want in solar energy and still receive the 30% rebate.
How do I take advantage of the ITC?
You must own your own panels in order to take advantage of the Solar ITC. If you lease your panels or get solar through a contract or other arrangement like a power purchase agreement (PPA), chances are that the credit will go to the company that is leasing the system or offering the PPA. A solar power purchase agreement (PPA) is a financial agreement where a developer arranges for the design, permitting, financing, and installation of a solar energy system on a customer's property at no or very little cost.
You also need a source of taxable income, homeowners that are retired with no taxable income, might not qualify for the Solar ITC.
Is solar worth it?
There are so many variables that go into the cost-benefit calculation with a solar PV system, such as tree coverage, what your cost per kW is, how much energy you use, and if your roof is solar-ready. At Universal Contracting & Solar we provide an affordable energy audit on your property to help you make an informed decision on if Solar is right for you. Read more on the cost savings available to you at our other blog Do You Really Save Money With Solar?
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