When people talk about cutting costs on solar energy systems, the federal tax credit gets all the glory. Rightly so, as it can reduce your income tax liability by 30 percent of the cost of your PV system.
Solar energy sales tax exemptions, on the other hand, get almost no attention, but this perk can reduce the upfront cost of a photovoltaic installation by hundreds or even thousands of dollars.
Is your photovoltaic system eligible for this money-saving incentive?
A tax exemption is one of the few solar incentives that saves you money right away. Tax credits and rebates give you cash back later, but an exemption means that your installation costs are reduced.
In most states, solar installation contractors are obligated to collect and pay sales tax on every photovoltaic system installation. This adds directly to your bottom-line cost. Some states, however, have begun waiving this tax as an additional incentive for adopting solar power.
Let’s look at a 6 kW residential photovoltaic system installed in New Mexico, for example. If the installed cost is $4.25 per watt, the overall system price would be $25,500. The New Mexico state sales tax rate is currently 5.125 percent, so that brings the total cost to $26,806.88.
With the sales tax exemption, however, that extra 5.125 percent is waived, and you keep the $1,306.88 in your pocket.
Sales tax exemptions for photovoltaic installations are becoming more popular, slowly but surely.
Currently, New Mexico offers a 100 percent exemption for sales tax on photovoltaic systems. Colorado and Arizona offer the same incentive. Unfortunately, homeowners in some other Intermountain West states aren’t quite that lucky. Idaho and Nevada do not yet provide any tax exemption for a solar installation, and in Utah, an exemption is available for some photovoltaic systems, but not all.
Wherever your home or business is, you can identify all available financial incentives quickly and easily.
DSIRE, or the Database of State Incentives for Renewables & Efficiency, is a reliable, complete and up-to-date source for information on solar system grants, tax credits, rebates and other incentives. The website, funded by the U.S. Department of Energy, is easy to use. Simply click on your state for a list of every available incentive, along with application instructions and eligibility details.
You also can ask us about current financial incentives.
At Intermountain Wind & Solar, we offer this information as a part of our free estimate for a solar system, as well as information on financing options. We serve both residential and commercial customers throughout the Intermountain West region, and we are committed to helping you cut your energy bills as much as possible.
Contact us today to learn more about saving money with your own solar energy system.
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