Tax season is upon us! …and thankfully within 24 hours, it will be over. We know that taxes are icky and even though they are a necessary evil, there are still some positive notes.
For a lot of us, doing taxes means a nice rebate check once a year. Instead of that new grill or shopping spree, why not invest that rebate check into a product that is going to make you money? We may not be able to determine exactly how much it will save you in this article, as we build systems custom to each homeowner, but we can guarantee you it will save you more than that grill! Good news is that we offer free consultations and quotes. So, If you’d like to know exactly how much solar will save you, then just give us a ring.
SOLAR TAX CREDIT
Not only can you put your rebate check to good use by going solar, but you can reap the benefits next tax season. Purchasing solar allows homeowners to utilize the solar tax credit (FTIC or ITC) where they can apply 30 percent of the solar purchase price as a credit toward his/her personal income taxes. This credit is used when homeowners purchase solar systems and have them installed on their home and is applicable for businesses as well.
- The ITC is a 30 percent tax credit for solar systems on residential (under Section 25D) and commercial (under Section 48) properties.
- The residential and commercial solar ITC has helped annual solar installation grow by over 1,600 percent since the ITC was implemented in 2006 – a compound annual growth rate of 76 percent.
- The existence of the ITC through 2021 provides market certainty for companies to develop long-term investments that drive competition and technological innovation, which in turn, lowers costs for consumers.
What happens if you can’t use the full 30 percent towards your owed taxes in one year? No problem! Homeowners can use the remainder of the 30% the following year.
Don’t get too comfy, because the ITC is scheduled to decrease! Both the residential and commercial ITC are equal to 30 percent of the basis that is invested in eligible property which have commence construction through 2019. The ITC then steps down to 26 percent in 2020 and 22 percent in 2021. After 2021, the residential credit will drop to zero while the commercial and utility credit will drop to a permanent 10 percent.
This is why it is pertinent to act now and utilize this credit while it is still flourishing. Please refer to MOSEIA for more information. As always, we recommend homeowners to consult their accountants and tax professionals regarding individual tax needs and tax-related questions.