Updates on the Solar Energy Federal Tax Credit
The installation of a residential solar system certainly became easier on the wallet with the current 30 percent federal tax credit! Residents who purchase their solar system either with cash or a loan may be eligible for a 30 percent tax credit.
Unfortunately, this percentage will fall by 4 percent in each of the subsequent two years. For systems placed into service in the year 2022 and following years, the tax credit is a “permanent” 10 percent for commercial and utility scale solar, with no provision currently for residential installations into the future.
A tax credit is a dollar-for-dollar reduction in income taxes that would otherwise be paid to the federal government. In order to qualify for the full 30 percent credit, a system installation must be completed by December 31, 2019.
The State of California also allows a property tax exclusion up to 100% through the year 2024. However, not everyone pays enough taxes to take advantage of these credits, so be sure to consult with a tax professional to be certain you qualify. Nancy from Central Davis was able to reduce her costs for installation, materials, and labor; the total amount, starting at $17,500, was reduced to $12,250 through the federal tax credit.
Additional financing options
There are many financing options for the installment of a solar system. This means the amount you can save varies based on your personal situation and property.
More benefits of going solar
There are many economic, personal, and sustainable reasons for going solar. First, the solar system installment entails a great return on your investment. The average homeowner pays off their solar purchase in seven to eight years and receives almost free electricity for the remainder of their solar panel system’s 25 plus year lifespan.
In addition, you can significantly reduce your electricity bills with the installment of a solar system. Even when electricity prices are increasing, rooftop solar can help you stabilize your electricity costs.
Mike from South Davis shared how much cheaper his electricity cost became by going solar. “When my energy bill comes, instead of a few hundred dollars a month, it’s now three bucks.” Chrissy from East Davis reports that, even in December, her season of high energy usage, she is able to stay in the first tier instead of moving into the third.
Some direct environmental benefits include the reduction of carbon emissions. According to the U.S. Environmental Protection Agency, the average household emits 20 metric tons of carbon pollution each year. However, with the installment of a solar power system, a typical two-person household reduces its carbon emissions by 3 to 4 tons yearly.
Whether your reasons for installing a solar system are economic, personal, sustainable, or all, these motivations will greatly benefit your life, community, and future generations!