Since 2006, we have had a very generous Federal Tax Credit for solar photovoltaic equipment – a 30% Investment Tax Credit. For most of our clients this is a straight-forward tax credit taken on Form 5695 for individuals and Form 3468 for businesses.
While many people hold the opinion that the Federal government needs to do more to support renewable energy, we feel that a 30% tax credit is generous. The improvement we would wish for federal energy policy would be to remove the myriad explicit and hidden subsidies for the standard centralized and polluting energy sources.
This solar tax credit expires in 2016, and we see little chance of it’s extension. So this 2016 date is a good deadline for you to install solar if you are unable to do so immediately.
For businesses, there are also special depreciation rules which can help decrease your tax burden, however these seem to change every year and during the year, so please consult your tax professional regarding depreciation of solar energy systems for your business.
SEIA maintains a good explanatory web page here: www.seia.org/policy/finance-tax/solar-investment-tax-credit
The primary IRS site for residential solar tax credits: www.irs.gov/uac/Form-5695,-Residential-Energy-Credits
The primary IRS site for commercial solar tax credits: www.irs.gov/uac/Form-3468,-Investment-Credit-2