2020 was not an easy year for the solar industry, but one good thing came out of it. In December 2020, Congress passed a $900 billion pandemic relief package, which included extending the Federal Investment Tax Credit (ITC) for qualifying solar power systems until 2023. The solar tax credit had been scheduled to drop from 26% to 22% in 2021, so this is great news for anyone considering going solar. It’s also great news for the solar industry, which has grown by more than 10,000% since implementing the federal solar tax credit in 2006. This extension will allow the solar industry to continue to grow, and to continue to offer businesses and homes affordable solar energy systems.
What Is The Solar Tax Credit?
The Federal Investment Tax Credit, also known as the Solar Tax Credit, was first introduced in 2006. It allows homeowners and business owners to deduct 26% of the cost of their solar energy system from their taxes, which reduces federal income taxes, and also reduces the upfront costs of installing a solar system.
What Is The Solar Tax Credit Extension?
As stated, the solar tax credit was set to drop in 2021, but it will now remain at 26% until 2023. The new schedule for the gradual reduction of the tax credit is:
- The tax credit will be reduced to 22% on January 1, 2023
- The tax credit will be reduced to 10% for commercial installations on January 1, 2024
- The tax credit will expire for residential solar installations on January 1, 2024
What The Extension Means For Homeowners
If you are thinking of going solar, now is a great time. If you purchase before 2023, you will still qualify for a 26% tax credit instead of a 22% credit – and every percentage point helps when it comes to buying something as costly as a solar energy system. That seemingly small 4% difference is a lot, and will mean a lot of savings for you. Let’s break it down:
If you purchase a $15,000 solar panel system, a 26% tax credit would bring the total cost of the solar system down to $11,100. However, if you wait until after 2023 to get a solar panel system at $15,000, the 22% tax credit would bring the cost down to $11,700. That’s a $600 difference that you could be pocketing!
What The Extension Means For The Solar Industry
This extension also has implications for the solar industry, which has been struggling since the start of the pandemic in 2020. The industry experienced a major drop in sales, but this extension will encourage more people to go solar and provide hope to the important renewable energy industry.
“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,” said Abigail Ross Hopper, president and CEO of the Solar Energy Industries Association (SEIA). “This pandemic has taken an immeasurable toll on American families, and our deepest sympathies are with those who have lost loved ones and those who are suffering economically because of the ongoing crisis.”
“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.”
Interested In Solar Energy?
If you are interested in taking advantage of the solar tax credit extension, it’s important to do your research on the right solar energy system for you. There are a number of solar companies in the United States that offer different panel types at different price points – you might be tempted to go with the cheapest option, but that could mean ending up with poor quality or inefficient panels. Not only that, but there is a lot of terminology and technology to understand when it comes to a solar panel system.
So, if you need help, and want to install efficient panels and still save money, Go Solar Energy can help. We work with the top-rated companies in the country and can easily compare the costs and efficiency levels of panels in minutes. We will explain how each system works, which panels are best and what size panel you will need for your home or business. Our goal is to find the best solar panels for the best price in your area, so you can save money AND go green.
To get free instant quotes, simply enter your zip code on our homepage, or to speak directly with one of our licensed agents in your area, call 888-290-3112.