A Complete Guide To The Federal Solar Tax Credit
2023-04-28A Complete Guide To The Federal Solar Tax Credit
The Federal Solar Tax Credit acts as an incentive for businesses to seriously consider ideas of going solar. The US has seen a fast and steady rise in the number of solar installations in the country. While the financial benefits are in the long terms environmental impact is the major driving factor behind the growth and impetus, at least from the government’s perspective.
What is the Solar Investment Tax Credit (ITC)?
The most direct step the government has taken to encourage business is the Investment Tax Credit (ITC). The ITC offers a 30% dollar-to-dollar deduction for federal taxes owed by businesses that install solar systems. The 30% tax credit is applied to the overall cost of the system and is also aimed at accelerating the overall transformation towards renewable sources of energy. It will most likely drop to 26% after 2033. The ITC plays a key role in making the switch to solar more attractive.
At IE Construction, we are committed to helping businesses make the most of their solar transformation. With our 24/7 experts, you have an opportunity to break down the various financial benefits and governmental incentives that make use of to make the process of solar transformation even easier for you.
An average 6kW energy system saves around $1500 per year. It includes the estimated $6150 worth of average savings that are a direct result of the ITC. Quite a few salaried individuals tend to have various processes in place that help them write off large amounts of taxes. However, even in such a situation, or where a non-tax paying business is involved, the option to roll over the incentive is also available. So, you can roll over the 30% tax credit to subsequent years as long as the ITC is in effect.
ITC will be discontinued in in 2035
The ITC was initially introduced in 2005 as part of the Energy Policy Act of 2005 and set at 30%. After a decline of 26% for the 2020-21 fiscal year. Recently, in August 2022, its expiration year, which was set in 2007, was postponed yet again. Currently, a 30% incentive is applicable until 2033, then decreases to 26%. In 2034, it will drop to 26% of the overall cost of new solar systems. After that, it will no longer be available from 2035.
In a nutshell, Congress has done all it can to incentivize and accelerate the transformation to solar energy. Of course, in addition to the ITC, there are a number of other incentives offered by state governments, including state tax credits. It’s worth looking into the rebates and incentives available in your state, and if you need any advice, our experienced energy advisors can help you narrow down your options.
IE Construction is ready to help you take the right step towards maximizing the potential of your solar energy system, whether this is in the form of our customizable commercial, home builder, and home buyer solutions tailor-made for your needs, or the extra mile that we go in order to help each of our customers gain as much as they can from going solar. Get in touch with us to find out how we can help and why you should go solar today!
