Solar tax credits greatly reduce the amount of income tax you owe after you install a photovoltaic system. Offered at both the federal and state levels, these financial incentives can significantly cut costs of adopting solar energy.
Now that photovoltaic power has reached historically low prices, some states have stopped offering a solar tax credit. Utah homeowners are fortunate, however, because our state’s solar investment tax credit (ITC) is still in place.
What Does Utah’s Solar Tax Credit Offer?
Utah offers a credit for the purchase and installation of any residential photovoltaic system. As long as the system supplies energy for a single-family home, condominium, apartment or other dwelling that serves as a home for someone, it qualifies for the Utah solar ITC.
The solar ITC in Utah isn’t limited to one photovoltaic system, either. You can claim the state credit for more than one system, as long as each one is installed on a residential unit that you own or use.
So, the big question is — how much can you save with the Utah solar ITC?
For each qualifying system, you can claim up to 25 percent of the costs, with a maximum claim of $2,000 per residential unit.
Can You Claim Both the State and Federal Solar Tax Credits?
Absolutely! In fact, you should claim both the state and federal solar ITC. The federal tax credit offers 30 percent back on residential installations, so together, these can reduce the cost of your photovoltaic system by 50 percent or more.
When applying, be sure to calculate these credits on your net system cost after subtracting any rebates, grants and installer and utility bonuses. Otherwise, Uncle Sam could see your photovoltaic system as a profit-making venture, in which case you could end up owing income taxes on the incentive amounts.
What if You Don’t Owe Enough to Claim the Full Solar Tax Credit?
Let’s say you install a residential photovoltaic system at a cost of $20,000. Utah’s solar ITC is for 25 percent of that, but you can only claim up to $2,000. What happens if you only owe $1,500 in taxes?
While the remaining $500 won’t be issued to you as a refund check, you can carry it over to the next year. You can do this for up to four taxable years. Our state’s solar-friendly statutes allow most homeowners to claim the full benefit of the Utah solar tax credit.
Of course, we aren’t CPAs, so we strongly recommend consulting with a tax professional. If, however, you simply need help filling out the forms, let Intermountain Wind & Solar help. We can tell you more about all of the financial incentives available for Utah photovoltaic power systems. Give us a call today to find out how much you can save with the federal and state solar tax credit.