28 Jan Legislative Update: Yes, You Can Still Get a 26% Tax Credit on Solar!
We’ve got great news! Residential and commercial property owners are now eligible to get the 26% solar income tax credit (ITC) until 2023. Why? Congress just voted to extend tax incentives for going solar!
On December 27th, 2020, the US Congress signed off on continued solar tax breaks as part of the $1.4 trillion federal spending package alongside the COVID-19 relief spending bill. Originally, the solar tax credit was set to drop down to 22% from 26% in 2021, but the reduction was pushed back as a way to support the green economy.
What Does That Mean for Me?
Now through 2022, you can continue to get your commercial or residential solar ITC at 26%, even if you finance your system. For example, if you get a $40,000 system, you will get a tax rebate of $10,400. The credit is expected to drop down to 22% in 2023, so if you haven’t thought about installing your panels, now is the time!
Here’s How to Get Started
Want to learn more about how this tax credit works and how to file? We’ve got all your solar ITC info right here! The BEST Part: There’s no cap on the value you can deduct! No matter how complicated or time-consuming the install, you will get a 26% credit if you install through 2022. Contact us today to start saving electricity and the environment.
The History of the Solar ITC
The first time solar tax credits came on the scene was back in 2005. This incentive was a way to give taxpayers 30% off the price of home solar installation. These incentives were extended annually or bi-annually until 2015 when they started getting phased down over the years. This gradual tax incentive reduction was intended to drive widespread adoption. The original plan was to drop to 26% in 2020, 22% in 2021, and down to zero after 2021. But, luckily for us, that’s no longer the case.
Why It Matters
The updated solution is good news for homeowners and climate change. The tax credits have been crucial for supporting the growth of solar. Yet there’s still a long way to go: Solar energy still makes up only 2.5% of energy production in the U.S., according to the Solar Energy Industry Association. The wind industry also received a limited extension of its tax credit too, as part of the relief bill.
The Solar Energy Industry Association has an ambitious 100-day agenda for the incoming Biden Administration that the 117th Congress dubbed The Solar Vision. One item of interest to homeowners is the advocacy for the expansion of the solar tax credit to include standalone energy storage systems, which would help homeowners cover the cost of adding battery backup to existing systems. Wouldn’t that be fantastic?
Abigail Ross Hopper, president and CEO of The Solar Energy Industries Association issued a statement on the bill: “We are heartened to see Congress step up to provide Americans with some relief after our country has been mired in a public health and economic disaster. Over the next few years, we have an opportunity to build a stronger, more reliable, and more equitable American energy economy and the action Congress is taking today is a helpful down payment.”
If you’re ready to take advantage of this valuable tax extension, contact us today to go solar!