Category: Tax Credits & Incentives

The Federal Solar Tax Credit, Explained in Plain English

The Federal Solar Tax Credit, Explained in Plain English

What is the federal solar tax credit?

When you install a solar system, 30% of your total project costs (including equipment, permitting and installation) can be claimed as a credit on your federal tax return. If you spend $10,000 on your system, you owe $3,000 less in taxes the following year. The solar tax credit expires in 2022.

The 30% Federal Solar Tax Credit can save you thousands when you switch to solar. But how does it work?

We’re here to explain the Federal Solar Tax Credit in plain English. If you want a basic overview of solar incentives without wading through the tax jargon, you’re in the right place.

What is the Federal Tax Credit for Solar?

When you install a solar power system, the federal government rewards you with a tax credit for investing in solar energy.

A tax credit is a dollar-for-dollar reduction of the income tax you owe. $1 credit = $1 less you pay in taxes. It’s that simple.

A quick but necessary disclaimer: we’re solar experts, not tax accountants! We do our best to give accurate advice, but please check with a professional to be sure you’re eligible to claim the credit.

For example, let’s say you owe $5,000 in federal taxes this year. If you claim a $3,000 tax credit, that pays off part of your liability. You would be left to pay just $2,000 in taxes after the credit is applied.

It’s different than a refund, because you have to owe taxes to claim the incentive. But since most people owe taxes, most people end up being eligible.

How much money do I save with the Federal Tax Credit?

Right now, the Solar Investment Tax Credit (ITC) is worth 30% of your total system cost. This includes the value of parts and contractor fees for the installation.

If it costs $10,000 to buy and install your system, you would be owed a $3,000 credit.

You are only allowed to claim the credit if you own your system. This is why we’re strongly opposed to solar leasing if you can avoid it. If another company leases you the system, they still own the equipment, so they get to claim the incentives.

You still get the benefits of cheap, renewable energy. But missing out on the tax credit is a huge blow to getting a positive ROI from your system.

solar guide

Free Federal Tax Credit Guide

Learn More »

It makes more sense to finance instead. You’re still on the hook for a loan, but you retain rights to the incentives that help make solar such a sound investment.

How Long Will the Federal Tax Credit Stay in Effect?

As the saying goes, “all good things must come to an end.”

Soon, the federal government will begin trimming back on its 30% tax credit incentive.

The credit steps down in value over the next few years, until it disappears completely for residential customers in 2022. Here’s the value of the federal tax credit over the next five years:

  • 2018: 30%
  • 2019: 30%
  • 2020: 26%
  • 2021: 22%
  • 2022: 0% (10% for commercial projects)
The rate of the federal tax credit for solar installations through 2022.
The Federal Tax Credit is slated to be phased out by 2022.

You can claim the credit in the same year you complete the installation.

The tax credit plays a major part in the return on investment you see from going solar. It won’t be around forever, but the good news is you still have at least another year to capitalize on the full 30% credit.

How do I claim the Federal Tax Credit?

So let’s get to the good stuff. What do you need to do to actually get your hands on this money?

Our first bit of advice is to keep all your receipts from the start. The more you spend on your project, the larger your credit – make sure to keep track of everything!

Here are some of the expenses that you are allowed to claim:

  • Solar equipment
  • Freight shipping costs
  • Solar consulting fees
  • Professional installer fees
  • Electrician fees
  • Engineer fees
  • Tools bought or rented
  • Wiring, screws, bolts, nails, etc.
  • Equipment purchased or rented (scaffolding or a man-lift, for example)
  • Permitting fees
  • Permitting service costs

Costs will vary depending on the approach you take to installation. Hiring a contractor is an expense that can be claimed.

You can also choose to install the system yourself. Although you can’t claim your own labor as an expense for the credit, you still come out far ahead on overall project costs.

The graph below shows a comparison of the total installed costs (post-Federal Tax Credit) of the same exact system when you choose to DIY, hire locally, or source the work to a national installer:

Solar Installation Costs after Federal Tax Credit has been applied

How to File Form 5695 With Your 1040 Individual Tax Return

Once you’ve spent the money, you’ll need to prove it to the government to claim your tax credit. For that, you need IRS Form 5695 to claim the residential energy credit.

If you file your own taxes, use the steps below to claim your Residential Renewable Energy Tax Credit.

  • Gather all your expense receipts and put them in a safe place.
  • Confirm you are eligible for the tax credit. (If you own the system and owe taxes, you’re probably eligible. Check with a tax specialist if you’re not sure.)
  • Complete IRS Form 5695 to add up your renewable energy credits (click the link for a step-by-step walkthrough on filing your tax forms).
  • Add your renewable energy credit information to your typical form 1040.

That’s it!

We hope this serves as a good introduction to the Federal Tax Credit and helps you navigate the research process. If you need help from a solar designer, get in touch with us for a consultation. We’re happy to walk you through any questions you may have.

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With the 30% Solar Investment Tax Credit Stepping Down After 2019, Now Is The Time To Go Solar

With the 30% Solar Investment Tax Credit Stepping Down After 2019, Now Is The Time To Go Solar

2019 Solar Investment Tax Deadline: What You Need To Know

  • The 30% investment tax credit for going solar drops in value after 2019.
  • It’s not enough to buy the system before the end of the year. To claim the credit, your system must be fully installed.
  • Solar systems take weeks to design, ship and install – so now is the time to start if you want to meet the deadline.

2019 is the last year to claim the full 30% investment tax credit for going solar.

The tax credit is a major incentive that puts money back in your pocket when you file your taxes. If you install the system before the end of 2019, you should be eligible to claim the full credit. 

But if you wait until after 2019, you’ll get less money back from the credit, which ultimately means you’ll spend more money when you do decide to go solar. 

To help you get as much value as possible out of your switch to solar, we put together a quick update on the tax credit changes to tell you exactly what you need to do to complete your project before the deadline hits. 

As you’ll see, going solar is a long and involved process. You’ll need to leave enough time to design your system, file a permit, ship the equipment, and build the system—all before the December 31st deadline. 

If you’re looking to take advantage of the full 30% credit, we urge you to get started now so the project doesn’t drag on and cause you to miss the cutoff date.

This article assumes you’ve been considering going solar and are generally familiar with the solar tax credit. If this is all new to you, check out our simple introduction to the topic:

2019 Deadline To Claim the Federal Tax Credit

The deadline to claim the full 30% solar tax credit is December 31st, 2019.

But what needs to be done before the deadline to be eligible?

It turns out the requirements are slightly different for residential and commercial installations.

Residential systems must be fully installed by the deadline to be eligible. To claim the tax credit on your return, you must complete your installation before the end of the 2019 calendar year.

For commercial systems, you just need to start installing before the end of 2019. The equipment needs to be shipped and you have to break ground on the project before the deadline—but unlike residential projects, it doesn’t need to be finished to be claimed on your return.

What You Need To Do To Make the 2019 Solar ITC Deadline

Designing and building a solar system isn’t a project that happens overnight.

Between planning, design, permitting, shipping, installation, and final inspection, it can take weeks—if not months—to make it through the whole process.

We can tell you from experience that December is our craziest time of year. We always get a surge of people who scramble to build their system before the end of the year so they can claim the credit on their next tax return.

But oftentimes they procrastinate and miss the deadline, because they underestimate how long the process takes.

So if you want to hit the 2019 deadline and claim the full 30% tax credit, we recommend getting started ASAP. Here’s our overview of how long you can expect each step in the process to take:

Research & Planning: 1-2 weeks

First you need to decide whether solar is right for you. In this phase, you’ll research some basic questions like:

These are a few of the most common questions people have about solar power, but it is certainly not a complete list. You’ll likely spend a decent amount of time doing this preliminary research before you’re ready to talk to a design technician.

Everybody goes through the research phase at their own pace. But if you want to move things along in time to claim the full 30% tax credit, we’d recommend you carve out 1-2 weeks for research. That’s enough time to answer common questions, do the math on ROI, and decide if going solar makes sense for you.

System Design: 1-2 weeks

In this step, you’ll connect with our design techs for a guided design consultation. We’ll look at factors like energy usage, local climate, and build site considerations. With this info in mind, we’ll design a system that is tailored to your energy usage and local sun exposure.

Once we have a design in place, our design tech will send you a quote. You can review this quote and request adjustments if necessary.

Plan to budget at least a week for this phase—more if the design goes through a round of revisions. It’s a collaborative process and there will be some back-and-forth communication between you and your design consultant.

Permitting: 2-4 weeks

Permitting is often the most time-consuming part of the process. Before you can build, you’ll need a permit approved by your local building authorities. 

This involves filing a permit request with product spec sheets and a wiring diagram attached. They may also require a site visit by certified inspectors before you can move forward.

The average timeframe here is about 2 weeks, but it can be longer depending on how responsive your local building departments are. We’ve seen permits stamped in just a few days, while others get delayed in the permitting process for several weeks.

Sourcing & shipping: 3+ weeks

We need time to pack and ship your equipment. Most components are stocked in our warehouse, while less common items are ordered on demand from the manufacturer, which extends the shipping time frame. 

Leave at least 3 weeks for distribution—more if we need more lead time to coordinate back orders with the manufacturer.

Installation: 1-2+ weeks

Depending on the complexity of the system, and your experience level with projects like these, it’s possible to completely install your system over the span of a weekend.

However, it’s more likely that DIYers take a bit more time to figure out the process and make sure they do each step correctly. After all, your system lasts for 25 years—it’s important to take time during installation to get it right.

DIY installs are typically completed over the span of a few weekends, so we would advise you to budget at least 2 weeks for this. It could be a bit faster if you hire an installer—just make sure to schedule them to install it when your shipment arrives, so the system isn’t gathering dust in your garage.

How Much the Investment Tax Credit Can Save You

Wondering what kind of impact the expiration of the tax credit will have on the cost of your system? Let’s look at a few real-world examples.

The average American household uses about 900 kWh of energy each month. Let’s see what it would cost to completely offset that usage, and how much you stand to get back from the 30% tax credit. 

This chart is broken out into grid-tied and off-grid systems, with the option to install it yourself or hire a contractor to do it for you at $1/watt. In all cases, we’ve assumed $1,000 for fees associated with shipping and permitting.

Ready to Go Solar?

If you want to claim the full 30% text credit before it reduces in value at the end of 2019, now is the time to get started on your project.

Fast-track your solar project by requesting a consultation with one of our experienced design technicians. We’ll evaluate your needs and connect you with a rep who can design your system and get your project moving forward.

If you want to get started ASAP, you can always give us a call at 1-800-472-1142.

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How to File IRS Form 5695 To Claim Your Renewable Energy Credits

How to File IRS Form 5695 To Claim Your Renewable Energy Credits

Form 5695 Filing Instructions

This article provides quick step-by-step instructions to help you file IRS Form 5695 and claim your renewable energy credits. We’ve provided sample images of the tax forms to help you follow along.

The federal tax credit is a major incentive for going solar. If you build your solar system before Jan. 1, 2020, you’re eligible to claim 30% of your total project costs as a credit toward your federal taxes. The credit offsets any taxes you may owe, and rolls over for up to 5 years if the value of the credit exceeds your tax liability.

This article provides a simple step-by-step walkthrough that will explain how to file your taxes to claim the Federal Tax Credit for investing in renewable energy.

Before we start, you’ll need to gather your receipts for any project costs. You can claim the cost of the system as well as any associated installation costs (materials, hired labor, permitting fees, etc.).

solar guide

Free Federal Tax Credit Guide

Learn More »

Step 1: Download Tax Forms

You’ll need four forms to file for the credit, which can be downloaded from the IRS website.

Form 5695

This is the Residential Energy Credits Form. We’ll be paying the most attention to this one.

Download 5695 here »

Form i5695

This is an information form about the 5695 that contains a worksheet we’ll be filling out.

Download i5695 here »

Form 1040

This is the Individual Income Tax Return form that most people use to file their taxes.

Download 1040 here »

Form 1040 – Schedule 3

This form covers tax credits, including the renewable energy credits. Add your Form 5695 results here to claim the credit.

Download 1040 – Schedule 3 here »

Step 2: Add Up Project Costs

First we need to know the total amount you paid to install your solar system. This includes the cost of components as well as any associated installation costs.

Gather your receipts and total any money you spent on the following:

  • Solar components (panels, racking, charge controller, inverter, wire, etc.)
  • Shipping costs
  • Solar consulting fees
  • Professional installer fees
  • Electrician fees
  • Engineer fees
  • Tools purchased or rented for PV installation
  • Equipment purchased or rented (scaffolding, man-lift, auger, etc.)
  • Wiring Screws, bolts, nails, etc.
  • Permitting fees
  • Other associated costs

Keep note of this total so that you can transfer it over to your tax forms.

Step 3: Start Form 1040

Begin by filling out Form 1040. This is your individual tax return. It’s a good idea to do this first since you will be referencing Line 11 (your total tax liability) later in this process.

Once you complete this form, switch over to Form 5695 to start calculating your residential energy credits.

Step 4: Start Form 5695

Form 5695 focuses on renewable energy credits.

Line 1: Enter the total amount you spent on your solar project, which you calculated in Step 2. We’re using $12,350 as an example, but be sure to enter your own total.

Lines 2-4: In this example, we’ll assume you didn’t invest in another form of renewable energy during the tax year. If you also invested in a solar water heater, wind power, or a geothermal heat pump, add those totals here.

Line 5: Total lines 1-4 and add them here.

Form 5695, lines 1 and 5

Line 6: Multiply the Line 5 total by 0.3. This calculates 30% of your project costs, the amount you can claim under the credit. Enter the result here.

Form 5695, line 6

Line 7: If solar was your only renewable energy purchase, check “No.” If you bought fuel cells, check “Yes.”

Lines 8-11: Skip these unless you purchased fuel cells during the tax year.

Line 12: If you claimed the solar tax credit last year and are rolling over a portion of that credit to this year’s taxes, enter the remaining value of the credit here. Otherwise, skip this step.

Line 13: Add the values from lines 6, 11 and 12. Enter the total here.

Form 5695, Line 13

Step 5: Fill Out Form i5695 Worksheet

Form i5695 contains instructions on how to fill out Form 5695. We need to complete the worksheet on page 3, then transfer that information over to Form 5695.

Line 1: Enter the total taxes you owe. This is located on Line 11 of your Form 1040. We’ve entered $21,442 as an example of what someone making $100k a year might owe. Again, enter your own results here.

Lines 2-9: Enter any other tax credits you will claim. For simplicity, we’ll assume there are no other credits.

Line 10: Add up lines 2-9 and enter the total here.

Line 11: Subtract Line 10 from Line 1. The result is the total value of the credits awarded to you. Enter it here.

Form i5695, Lines 1 and 11

Step 6: Complete Form 5695

If your credit is higher than your total tax liability, the remainder of the credit can be rolled over and applied to a future tax return.

Now that we’ve finished the worksheet, jump back to Form 5695.

Line 14: Enter the value from Line 11 of the i5695 worksheet you completed in the previous step.

Line 15: Check Lines 13 and 14 and enter the lower of the two numbers on Line 15. This ensures your credit doesn’t exceed your tax liability.

Line 16: If Line 15 is less than Line 13, subtract Line 15 from Line 13 and enter the value here. This is the amount of “leftover” credit that can be rolled over to a future return. This is not common.

Form 5695, Lines 13-15

We’re done calculating your renewable energy credits! Now we just need to add it to your individual tax return.

Step 7: Apply Form 5695 Results to Form 1040 – Schedule 3

Take the amount from Line 15 of Form 5695 and enter it on Line 53 of Form 1040 – Schedule 3.

Form 1040 Schedule 3

Attach Form 5695 and Schedule 3 to your Form 1040 when you file. (No need to include the Form i5695 worksheet.)

You’re done! Kick back and bask in your reward for investing in renewable energy.

If you have any questions about how the Federal Tax Credit works, or simply want to explore the possibility of going solar, give us a call at 1-800-472-1142. You can also grab our free Federal Tax Credit guide for more info.

Disclaimer: This guide is offered as basic instruction only and is not meant as professional tax preparation advice. For specific tax-related questions or issues, we recommend consulting a certified tax preparation specialist or CPA.

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Can you claim “after-install” batteries on your taxes?

Can you claim “after-install” batteries on your taxes?

Good News for the Future of Energy Storage

Here’s some news that’s sure to charge you up…

The IRS recently ruled that—for one couple who had purchased solar, at least—a retrofitted battery system qualified for federal solar tax credits.

Here’s the backstory…

The couple had been challenged when they tried to claim the Solar Investment Tax Credit (ITC) on the cost of their energy storage.

Now as you may or may not know, batteries purchased at the same time as a solar energy system have been eligible for the tax credit since a ruling was made in 2013.

So, this couple reasoned, the battery they purchased a year after their system should also be eligible for the same ITC.

solar guide

Free Federal Tax Credit Guide

Learn More »

The IRS disagreed, but this couple wouldn’t take “no” for an answer. And on March 2 of this year—if you’ll forgive the pun—the taxman saw the light.

The IRS told them that the battery they added to their existing system DID qualify for a 30% tax credit—in part because solar power is the ONLY way to recharge the particular battery they had installed.

The battery was JLM Energy’s Phazr. The Phazr is installed between the solar panel and inverter, making it impossible to be charged by an outside source like the utility grid. It charges on solar power and stores energy during the day, then puts powerback into the grid at night. It’s easy to retrofit to existing systems—say, for example, if your usage changes or your utility rates go up. So it’s becoming quite a popular choice for solar energy system owners.

That the IRS gave the Phazr the nod is good news for both installers and consumers.

Utilities are starting to change the way they bill customers—and these changes (invariably) reduce the value that they credit for solar energy. Peak rates shifting to night-time when you have to draw power from the grid… Credits being lowered for adding energy to the grid during the day… We’ve heard it all.

In other words, consumers are getting hit twice.

But energy storage is the solution to future-proofing a system from these changes.

Which means if batteries become eligible for tax credits, homeowners will be happy. Installers will be happy, too, because consumers will buy more batteries.

Progress is Good, but Policy is Better

Now before you get too excited, you should know this: the couple received this decision from the IRS in what’s called a “private-letter ruling” that’s ONLY applicable to them.

In other words, for the time being, only this particular couple gets to claim a credit.

But solar industry analysts are still excited, for the simple fact that this ruling represents progress.

It may also indicate that the IRS might make this kind of approval into policy in the future.

And that means that—someday—everyone will enjoy the tax credit on after-install batteries.

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How to Claim Your Solar Credit Infographic

How to Claim Your Solar Credit Infographic

How to Claim Your Solar Tax Credit

The 30% Federal Solar Tax Credit is still in effect. But what should you do in order to claim it? We put together this quick guide to walk you through the process and get you that tax credit in no time.

solar-tax-credit-infographic-image


This guide will get you well on your way to filing for your credit, but we are solar experts and not tax professionals so we always recommend talking to a tax professional.

Know someone who’d benefit from this handy infographic? Share with them by clicking on our social icons!

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A Guide to Solar Panel Tax Breaks

A Guide to Solar Panel Tax Breaks

It’s no secret that leaders in energy production are working hard to ensure the viability of renewable energy sources. A large factor in determining renewable energy viability is the economics of it. Only when renewable energy becomes economically viable will it be able to supply larger quantities of clean energy on a greater scale.

Solar energy accounts for less than 1% of US energy consumption.

Though many residences, businesses and public buildings have adopted solar energy, it still only accounts for less than 1% of energy consumption in the United States and just above 1% globally. European countries like Germany, Italy and Greece have approximately 7% of their energy supplied by solar. But the solar industry has its sights set on far greater adoption rates that are required to grow the industry and help achieve energy independence.

The current paradox facing the solar energy industry is that higher solar installation rates depend on affordability, and affordability depends on higher solar installation rates. So how do solar energy providers and advocates increase solar installation and usage rates if consumers still perceive the initial costs as being too high? The answer is in financial incentives.

Financial incentives ease the burden of high installation costs and encourage homeowners and business owners to purchase solar energy systems. Financial incentives in the form of rebates, tax credits and tax exemptions are available at the municipal, state and federal levels. This strategy intends to galvanize widespread adoption of solar energy throughout the United States.

Today, there are countless financial opportunities for individuals and businesses to take advantage of when it comes to solar. Still, many people aren’t even aware of what’s available or how it all works. This guide will cover some of the most important solar panel tax breaks to be aware of and how to apply for them so you can start earning a return on your investment quicker.

What Is a Tax Credit?

Definition of a tax credit.

The first step in taking advantage of solar panel tax credits is understanding exactly what that is. A tax credit is a government-authorized amount of money that a taxpayer (individual or business) is allowed to deduct form their taxes owed to the government. Tax credits can be provided at a municipal, state or federal level. Unlike tax exemptions or deductions, which lower a person’s total taxable income, tax credits lower the amount of taxes you owe at the end of the year.

When it comes to solar tax credits, these dollar amounts are deducted from taxes based on a percentage of the total purchase and installation costs of solar products. These costs can be claimed through their designated tax codes when you file your taxes.

Why Are Tax Credits Offered?

There are many reasons why governments establish tax credits. In the case of solar energy, governments issue tax credits because it:

  • Lowers the consumer cost of a solar energy system
  • Motivates homeowners and businesses to switch to renewable energy
  • Reduces energy consumption levels
  • Bolsters economic growth in the renewable energy sector
  • Alleviates usage constraints on traditional grid energy
  • Increases viability of solar energy
  • Encourages independence from reliance on fossil fuels

All of this contributes to a larger vision of one day making solar energy economically viable enough to support larger-scale energy provision. Tax credits help people and businesses get on board with switching to solar energy while helping to eliminate financial risks, which are often barriers to adopting new technologies.

Other Types of Solar Tax Breaks and Financial Incentives

As mentioned, tax credits are available to help reduce the level of taxes owed to the government, based on the purchase of solar panels and other related products. But this is just one type of financial incentive offered at varying local, state and national levels.

Types of Financial Incentives

In addition to tax credits, financial incentives for solar energy installation can include rebates, grants and property or sales tax exemptions. Here’s how these other types of financial incentives work:

Rebate: A rebate, in general terms, is an amount of money the consumer gets back based on certain conditions of their purchase. This allows the consumer to get money back quicker than with a tax credit. Different structures of rebates are available, from lump sum amounts after purchase to regular dollar amounts based on the amount of solar energy being produced. Rebates often come with a time limit, so it’s important to look for this when you first start planning your investment.

Grant: A grant is a sum of money that’s given to individuals or organizations to help them cover the costs of solar panel installations. Grants can come from the government or from private organizations who want to help encourage solar adoption. Grants are often available for low-income homes or for businesses as part of their building energy efficiency improvements. Grants can either fully or partially cover a solar energy project and are typically non-taxable.

Tax Exemptions: A tax exemption occurs when the purchase of a product or service is excluded from an otherwise applicable tax. This can include state or city sales and use taxes or property taxes. Most states offer an exemption on sales taxes when purchasing solar equipment. Depending on the state, this may include solar components as well as the professional installation services.

Another type of tax exemption is for property taxes. Because solar power systems increase home and building values, some states are now excluding solar energy systems from property tax assessments so home and building owners don’t have to pay increased property taxes.

The Federal Solar Tax Credit (Solar ITC)

The most well-known financial incentive for solar energy installation in the United States is a federal tax credit for solar panels, also known as the Solar Investment Tax Credit (ITC). It was first implemented in 2006 as a way to stimulate the solar energy industry in the United States. The solar ITC is available both for residential and commercial installations. Here is what’s included in the federal solar tax credit and how it works:

30% credit from the Solar ITC

  • Tax Credit Amount: The Solar ITC offers a 30% credit on residential and commercial solar installations. Prior to 2009, there was a $2,000 ceiling on the federal solar tax credit. But as of January 1, 2009, new solar installations don’t have a maximum credit amount. The 30% tax credit for solar panels is available for installations that go into service before December 31, 2019.
  • Tax Credit Administration Details: The IRS issues the federal solar tax credit. For residential solar installations it falls under section 25D, and for commercial installations it falls under section 48 of the federal tax code. If your solar tax credit exceeds that year’s tax liability, the remainder can be carried forward to the following taxable year.
  • Tax Credit Application: If you’re a residential homeowner, your federal tax credit gets applied to your personal income taxes to reduce your total amount owed. If a business installs a solar energy system, the business claims the credit on their business taxes. The credit amount is calculated at 30% of the total eligible solar installation costs. It’s important to note that the ITC is a credit and that you do not receive a cash rebate from the government later on.
  • Tax Credit Eligible Projects: The solar ITC covers solar-electric (photovoltaic or PV) and solar water heating projects. These can include residential or commercial projects as well as installations on RVs, mobile homes and boats deemed to be secondary residential dwellings. The solar project does not have to be installed at the person’s primary residence in order to be eligible for the tax credit, but the residence does have to be in the United States.

All solar installations packages are eligible for the solar tax credit.

  • Tax Credit Eligible Expenses: All solar installation packages for home or business are eligible for the solar tax credit. These include the photovoltaic panels, inverters and other components, as well as the installation cost. Backup battery systems for dwellings or buildings that may not be grid-tied are also eligible for the ITC. Any products that upgrade or expand existing solar electric or solar water heating systems are also eligible if they include at least one photovoltaic panel.
  • Tax Credit Requirements: Specifically concerning solar water heating projects, the installed equipment must be certified for its performance by the Solar Rating Certification Corporation (SRCC). At least half of the property’s energy used to heat the water must come from solar.
  • Tax Credit Term: Originally, the Solar ITC was only offered until the end of 2015. However, it has since been renegotiated and is now offered at 30% now through until the end of 2019. After that, the credit is reduced to 26% in 2020 and 22% in 2021. After 2021, the residential solar tax credit will no longer be available. However, a 10% tax credit will permanently be available to commercial businesses.

State-Level Solar Tax Credits

Individual states offer their own tax credit.The Solar Investment Tax Credit issued by the federal government isn’t the only solar tax break available to residences and businesses. Individual states offer their own tax credit for solar panel programs to their residents on qualified solar installation projects.

Here’s how some of the states are offering their own solar tax credits:

1. Arizona: The Arizona Solar Energy Credit is a personal tax credit first offered in 1995. It provides taxpayers with a 25% personal income tax credit based on the total amount spent on residential solar photovoltaic and water heating systems. It offers this 25% tax credit up to the amount of $1,000 per residence.

2. Massachusetts: The Massachusetts Department of Energy Resources provides its residents with a 15% personal income tax credit — up to $1,000 maximum — on all residential solar photovoltaic and water heating installation projects.

3. New York: The Residential Solar Tax Credit program offers New York residents a 25% income tax credit on residential solar energy systems, up to a total amount of $5,000. There is no expiration date on this solar tax credit at this time.

4. South Carolina: South Carolina’s Solar Energy Tax Credit program offers a 25% personal income tax credit on residential and commercial solar photovoltaic and water heating installations. The tax credit limit is $3,500 for any given tax year or up to 50% of taxpayer liability for that year — whichever is less. South Carolina’s Solar Energy Tax Credit program is available now through the end of 2018.

5. Utah: Utah offers a Renewable Energy Systems Personal Tax Credit of 25% on all eligible residential solar energy installations up to $2,000. At this time, Utah has not provided an expiration date on this financial incentive program.

Solar Panel Rebate Programs

Solar panel rebate program incentives.

Solar panel rebate programs incentivize homeowners and businesses by providing them with a cash rebate after they’ve installed and begun using their solar energy system. These rebate programs and amounts vary by state, municipality and even utility company.

Many solar panel rebate programs are based on production capacity, whereby they offer a certain rebate amount per watt of energy produced. Others may be based on the amount invested in the system’s installation.

Here’s a look at some different solar rebate programs happening at different levels of government and with different project types. Make sure to check the sources for updates as these incentives change frequently:

1. LADWP Solar Incentive Program: The Los Angeles Department of Water and Power’s (LADWP) Solar Incentive Program offers residential homeowners, businesses and government organizations a rebate on solar energy produced by photovoltaic panels. These rebates are available now through the end of 2017. Residential rebates are $0.25 per watt, commercial rebates are $0.40 per watt and governmental or non-profit rebates are $1.15 per watt.

These particular solar panel rebate amounts will step down over time. Rebates are eligible for system sizes between 1 kilowatt and 5 megawatts.

2. CPS Energy Solar PV Rebate Program, San Antonio, TX: The utility company CPS Energy offers San Antonio, TX residents a solar photovoltaic energy production rebate of $0.80 to $1.20 per watt depending on different eligibility tiers. The Solar PV rebate program, funded through the Save for Tomorrow Energy Plan, is available for commercial, industrial and residential installation projects from now through 2020.

3. Boulder, Colorado Solar Rebate: The city of Boulder, Colorado offers its residents and businesses an approximately 15% rebate on any city sales and use taxes paid on materials and/or permits needed to install a solar energy or water heating system. To obtain their rebate, homeowners and businesses must complete their rebate application within 12 months of the city’s final inspection. While this financial incentive program is based on an amount of taxes paid, it is considered a rebate because it gives the applicant cash back, as opposed to a credit.

Solar Tax Breaks and Exemptions

As mentioned, other important solar tax breaks to be aware of are property and sales tax exemptions. Unlike tax credits, solar tax breaks and exemptions are immediately effective. How solar tax breaks and exemptions work depends on the state or local jurisdiction.

Here are some examples of available solar panel tax breaks and exemptions in certain states:

1. California Property Tax Exclusion: California has primarily led the way in solar incentives and adoption in the United States. California alone has over 200 renewable energy incentive programs, including the important Property Tax Exclusion for Solar Energy Systems. This property tax exemption program is statewide and provides a 100% exclusion on the solar energy system’s value.

California’s state tax code doesn’t consider solar energy systems as increasing home value for property tax calculating purposes. Therefore, if you install a residential solar energy system, your property taxes won’t increase because of the value solar adds to the home. This is particularly important in the State of California, where property values have risen dramatically in recent years. A property tax exemption is a nice incentive for those concerned about increasing property taxes.

2. Washington DC Personal Property Tax Credit: Similar to California’s program, Washington, DC offers a 100% exemption on residential and commercial solar installations when it comes to assessing property taxes. This incentive program was implemented in 2012 and covers both photovoltaic and water heating solar installations, as well as other solar technologies.

3. State-Level Sales Tax Exemptions: Often overlooked, solar panel tax breaks are the various sales tax exemptions on solar installations and products. Over 29 states offer some form of sales and use tax exemption on solar equipment, devices or professional installation services performed by contractors. For example, Minnesota, New Jersey, New York and Arizona offer a 100% sales tax exemption on solar energy systems installed for residential or commercial uses, with no maximum amount.

Tips on Claiming and Receiving Tax Credits and Rebates

If you’re planning to install a solar power system for your home or business, it may seem like an overwhelming process, given how many different financial incentives and options are out there. To help make the process easier, here are a few tips to follow while claiming and receiving your solar panel tax credits and rebates:

1. Ask your Solar Design Tech: Our solar design techs are experts in their field. We have robust information about the different types of incentive programs in your area. We can help recommend the best rebates and tax credits for solar panel programs and ensure your particular system meets the eligibility requirements of the incentives.

The Database of State Incentives for Renewables & Efficiency

2. Research Financial Incentives in Your Area: If you’re taking the DIY approach or you just want to do your own research, you can check online using tools like the Database of State Incentives for Renewables & Efficiency (DSIRE). This comprehensive database is funded by the U.S. Department of Energy and holds thousands of different local, state and federal tax credits, rebates, grants and other financial incentives for renewable energy installations.

3. Consult a Tax Professional: Because many of these financial incentives — particularly the federal solar investment tax credit — involve tax liability, it’s important to consult a tax professional. Consulting a tax professional prior to installing your solar electric or water heating system can ensure your specific project meets all eligibility requirements. Additionally, a tax professional can help ensure you’ve completed your applicable tax sections appropriately. This is especially necessary where a business investment in solar is concerned.

4. Act Sooner Rather Than Later: Many of the financial incentives, including the federal solar tax credit, have deadlines attached to them. This is to encourage homeowners and businesses to adopt solar power now. Time-sensitive financial incentives further encourage people to switch to solar if they know their tax credit eligibility will expire. With the federal tax credit, the highest amount available is a 30% credit, which is only available until the end of 2019. From there, the credit amount drops annually until it goes away completely in 2022.

Remember that you’re able to combine multiple incentives together in order to get the greatest possible return on your investment. By combining financial incentives, you not only offset your upfront installation costs with sales tax exemptions, but you can also reach your payback period earlier through the various rebates and income tax credits available.

Impact of Solar Tax Credits and Rebates

Solar industry employment

Incentivizing solar energy at a consumer level is essential to ensuring the industry’s long-term prosperity. The more homeowners and businesses take advantage of available solar panel rebates and tax credits, the more it supports the industry. As the industry grows, solar energy will become increasingly more accessible to people of all income levels.

Importance of incentivizing solar energy.The federal solar tax credit in particular has had a tremendous impact on the solar energy industry. Policymakers saw the industry growth and positive changes that came from the original ITC, which caused them to extend the program from 2016 onward. It’s expected that this extension will further drive growth in the solar industry.

It’s believed that by 2020, the solar industry will employ 420,000 workers and will create more than 20 gigawatts of solar electricity annually. It’s estimated that with these projected numbers, solar electricity will account for 3.5% of all energy consumption in the United States by this time. This is a massive increase from the less than 1% solar provides today.

If you are interested in installing a residential or commercial solar energy system, be sure to research all applicable local, state and federal financial incentives you may be eligible for. For more information on which incentives are available to you, visit Wholesale Solar’s list of local and state incentives.

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Massive Solar Rebates for Indiana Residents

Massive Solar Rebates for Indiana Residents

Attention Northern Indiana Residents:

Have you heard of the Feed-in Tariff program from NIPSCO? This program allows homeowners producing renewable energy to sell power back to NIPSCO at some of the highest rates-per-kWh available in the country!

NIPSCO (Northern Indiana Public Service Company) is currently accepting Participation Request Forms, and Wholesale Solar encourages you to apply!

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April Savings – Federal Tax Credit and Solar RV Sale

April Savings – Federal Tax Credit and Solar RV Sale

With summer just around the corner, there are two great reasons to consider going solar:

30% Federal Tax Credit

Buying a solar system for your home or business may qualify you for a 30% Tax Credit for the total cost of your entire installation. Of course this includes the cost of the solar power system, and also the cost of installation, engineering, random equipment, fees, etc. So save your receipts throughout the process!*

See our federal tax credit page for details, and also check our local and states incentives page for possible additional savings on top of the federal credit.

The future of the 30% Federal Tax Credit is murky and will either be decreasing or disappearing as of December 31, 2016. Make your purchase now to lock in your credit in for the 2015 tax season!

*Your expense items may vary. Be sure to speak with your tax professional.

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It’s high time to go solar in Missouri.

It’s high time to go solar in Missouri.

Missouri ArchesWhy? Right now, Ameren Missouri and Kansas City Power & Light, two of Missouri’s largest utility companies, will pay you $2.00 per watt and as much as $50,000 to purchase and install a solar power grid-tied system. What does that mean for you? Take, for example, one of Wholesale Solar’s mid-sized solar power grid-tie packages. It comes with forty 245-watt solar panels, so the system size is 9,800 watts (40 x 245). With a $2.00 per watt rebate, you’ll be eligible to receive $19,600. That’s $4,000 more than the cost of the system!

The 30% Federal Tax Credit will help you further recoup your solar investment. It can be applied to equipment and installation costs without a maximum limit.

See what your utility company would pay you to go solar and read about the 30 Federal Tax Credit here.

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Texas: Money for nothin’, Power for free.

Texas: Money for nothin’, Power for free.

In Texas, utility solar incentives are generous! If you compare them to the cost per watt for a solar power grid-tied system, you’ll see that some incentives will literally pay for an entire system. Wholesale Solar’s Gridtied Solar Power Systems range from $1.30 to $2.40 per watt. While rebates and incentives in Texas range from $0.75 to $2.50 per watt, the Federal Tax Credit covers about 30% of the cost. Do the math!

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Texans, research your rebates here.

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