Solar Savings – everything you need to know about the federal tax credit for 2019
The federal solar tax credit, allows you to deduct 30 percent of the cost of installing a solar energy system from your federal taxes. This tax credit applies to both residential and commercial systems, and there is no cap on its value. Thanks to the federal tax credit, the average Power Trip Energy client saved over $5,000 on the cost of going solar in 2018.
What does the federal solar tax credit extension mean for the solar industry?
The federal tax credit was originally established by the Energy Policy Act of 2005 and was set to expire at the end of 2007. A series of extensions pushed the expiration date out to the end of 2016, but experts believed that an additional five-year extension would bring the solar industry to its full maturity. Thanks to the spending bill that Congress passed in late December 2015, the tax credit is now available to homeowners in some form through 2021. Here are the specifics:
- 2016 – 2019: The tax credit remains at 30 percent of the cost of the system. This means that in 2019, you can still get a major discounted price for your solar panel system.
- 2020: Owners of new residential and commercial solar can deduct 26 percent of the cost of the system from their taxes.
- 2021: Owners of new residential and commercial solar can deduct 22 percent of the cost of the system from their taxes.
- 2022 on wards: Owners of new commercial solar energy systems can deduct 10 percent of the cost of the system from their taxes. There is no federal credit for residential solar energy systems.
Additionally, in previous years, owners of new solar energy systems could not claim the tax credit unless their system was operational. Now, the legislation allows them to claim it as soon as the construction of the system is complete, as long as it is operational by December 31, 2023.
Do I qualify for the solar panel tax credit?
If you have your solar array completed by the end of 2019 you are eligible for the 30% solar tax credit. Even if you don’t have enough tax liability to claim the entire credit in one year, you can “roll over” the remaining credits into future years for as long as the tax credit is in effect.