In 2015, solar companies and homeowners using solar power were relieved when the federal spending bill of 2016 was approved by the legislature, and a
The bill which was passed into law on December 18, 2015, contained the extension of the tax credit of this energy incentive for 5-years, thus making solar powered energy more accessible for every American citizen.
Meaning of Solar Tax Credit
With the Federal Investment Tax Credit (ITC), 30% of the amount spent to install a solar system, is subtracted from your federal levy. This solar tax credit has no specific value and is applicable to both private and public systems.
In 2019, the average amount a Next Level solar customer may save from the installation of a solar powered system is more than $5,000 due to this benefit.
Impact of the Federal Solar Tax Credit Extension on the Energy Industry
The Federal Investment Tax Credit (ITC), established in 2005 by the Energy Policy Act, was to expire by 2007. But, due to several extensions, the expiration was pushed to 2016, then the industry’s experts suggested that the solar industry may fully mature if not extended by another 5-years.
With the spending bill passed into law in December 2015, homeowners can now access the credit until 2022.
Here is the breakdown:
2016 – 2019: This ITC is placed at 30% of the cost of the Solar system to go live. It means that solar systems can still be purchased at a discounted price in 2017.
2020: 26% of the cost of solar systems may be deducted from the levies of new private and public solar system owners.
2021: 22% of the total cost of this system may be subtracted from the taxes of new private and public solar system owners.
2022+: 10% of the cost of solar systems may be deducted from the taxes of new public solar energy system owners starting in 2022 an on. This is not applicable to residential solar energy systems.
Are You Qualified for This Solar Tax Credit?
You can only be qualified for the solar tax credit if you own (or purchase, not lease) a solar powered system. If your tax liability is not enough to claim the full credit in a year, the leftover credits can be rolled over for future use, up to three years forward. Unused commercial credits can be carried forward for up to 20 years.
One thing you must know is that, by signing a lease (or PPA) with a solar installer, you cannot claim ownership of the solar system, neither will you receive the tax credit for it.
How To Claim The Solar Tax Credit
The solar tax credit can be claimed by filing your annual federal levy returns. However, you must inform your accountant of your new solar system in the previous year, or you can use Next Level Energy’s guide (coming soon) to claim your Solar Investment Tax Credit if you’re filing an individual tax return.