Solar Investment Tax Credit: Schedule and Other Incentives
In part one of this two-part blog series, we went over some basics on the investment tax credit (ITC) for solar power systems. Also known as the federal solar investment tax credit, this program is known as one of the single best financial incentives for solar or any related program in the country.
At Intermountain Wind & Solar, we’re happy to assist our clients with both residential and commercial solar power installation, including areas related to tax incentives for both solar installation and solar panels themselves. How do you claim the federal investment tax credit for a solar power system, and how will this program be changing over the next few years? Here’s some important information to be aware of.
How to Claim ITC
The investment tax credit is very easy to claim, and will be done in the same format as you claim any other major tax credit. When you file your yearly federal tax return, you simply claim the credit here. If you’re unsure how or where to do this, contact your accountant or a public tax professional for basic assistance.
ITC Declining Schedule
As of last year, 2020, the ITC has begun to enter a declining phase of its existence. This is largely because the federal government has recognized that solar installation has become far more affordable in recent years, and there isn’t quite the same need to offer tax rebates to incentivize people. Here’s how the program will look in future years (we’ll also include the previous periods for reference):
- 2016-2019: ITC credit was 30% of the cost of the system
- 2020-2022: New owners of residential and commercial systems can deduct 26% of the cost of the system
- 2023: Owners can deduct 22% of the cost of the system
- 2024: Owners can deduct 10% of the cost of the system
For this reason, if you’re considering a solar installation sometime in the future, we recommend getting to it quickly.
While the ITC is the primary federal tax credit and often the largest single incentive solar power owners can receive, it’s not the only one. Many others will vary depending on the state you live in – ask our pros about whether you might qualify for any of the incentives or bonuses for any of the states we cover. This is an area that’s increased significantly in recent years and should continue to in many local areas as various municipalities and state governments look to increase citizen reliance on this greener, more efficient form of energy.
For more on how to understand and obtain tax incentives for your solar power installation, or to learn about any of our solar power installation or the Tesla Powerwall battery, speak to the staff at Intermountain Wind & Solar today.