When you thought solar panel does not get any better, it actually does! Reap up the benefits of having a solar panel installation in your home with various tax credits. People call this the ultimate life hack – hitting two birds in one stone by saving the planet and your wallet at the same time!
Solar Tax Credit 101
The Federal Tax Credit pertaining to renewable energy use particularly solar panels is a tax incentive issued and passed by Congress. The Federal government of the United States, wanting to increase and promote the use of clean energy, incentivize households and business owners who use solar panel roof.
In the most basic form, individuals who own a solar rooftop panel in their home are remunerated for their good deeds in saving the environment. As such, a reward of up to 26% solar tax credit can be applied to the annual taxable income.
As of December 2020, Congress has passed an extension of the Investment Tax Credit which covers expenses in installing a solar panel system. The law provides 26% tax credit for solar panel systems installed from 2020 to 2022, 22% tax credit for solar panel systems installed in 2023. More so, older solar panel systems that were installed before December 31, 2019, were eligible for a whopping 30% solar tax credit. What is more exciting is that there is no maximum amount that can be claimed. Hence, the bigger the expense, the larger the eligible tax credit deductible to your annual income tax.
How do you know if you are eligible?
There is no trick in eligibility, unlike other tax incentives. The solar tax credit is quite straightforward and simple. Below is the set of criteria in order for you to become an eligible individual for the solar tax credit:
1. Your solar installation occurred from January 1, 2006, and December 31, 2023.
2. The solar panel system is located at your primary or secondary legal residence in the United States.
3. You own the solar panel system with your name registered as the owner.
4. The solar panel system you sourced from local solar companies Apopka is new and will be used for the first time. Credit can only be claimed once and on the original installation.
What are the expenses covered?
In light of the solar panel tax credit application, there are certain expenses that are included and excluded when computing the total expense for your solar panel. Government accepts the following:
1. The labor costs for planning, installation, legal and regulatory fees, inspection and maintenance costs, and developer fees.
2. Necessary equipment for operation such as wires, inverters, and mounts.
3. Storage devices such as solar power banks that are subject to installation date inspection.
4. Tax on sales of purchasing the solar panel system.
Other than the Federal government-mandated solar tax credit, make sure to check out your state tax credits which usually have the equivalent tax credit which can go hand in hand with the federal tax credit. Seek advice from a lawyer or someone knowledgeable about tax laws in your area.