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How Do Solar Tax Incentives Work?

May 3, 2022

You just bought solar power for your home and you have seen the great monthly savings it has provided. You probably get happy to see the amount of money you have been able to save. If you already got solar, did you see what incentives your area provides? The U.S. government since 2006 has funded the solar department and states have created a policy to help homeowners become solar called the Solar Investment Tax Credit (ITC).  The incentives differ from state to state. The tax incentive is the amount of money the government gifts you for switching to a green energy option.  

The incentive is based on the size of system you get and how much your area is paying you to get solar. Homeowners do have certain requirements you need to be able to qualify for solar and incentives, you can find a list of solar requirements online

Solar energy customer filling out solar incetive form 5695

Solar installation in Ohio by solgen power

It is good to check with your state guidelines to see what kind of incentives you qualify for. The incentives can help drive down the cost of your solar energy installation by giving you back some of that money you spent. This is really beneficial because homeowners can claim it on their taxes for a bigger payout.

The tax incentives are done when doing your yearly taxes, you need to have proper paperwork when doing taxes to get the proper credits you deserve. The form you must file when doing your taxes to claim your credit is an IRS Form 5695. You can ask your local tax representatives for more information on what you need to complete the form. If the incentives are state based then you must go onto your state’s official website and find out how to redeem those incentives. Once you go through the process, you will get the tax incentive included with the rest of your tax return.

When the solar ITC started it was crediting 30% of the cost of the solar system but in 2020, it dropped down to 26% until 2022. As time goes on, more people will switch to solar energy and thus step down on the percentage of the incentive. That is why it is best to go solar as soon as possible to reap the most benefits possible before they go down. The amount also differs depending on location. Some locations will credit more than others and that’s why it is good to look up what your area offers. You can visit your state government website to find out for more incentives they provide that are not part of the government incentives

ground mount solar panels installed in the yard

Solar Energy Customer with solar just installed.

Solar Incentives has really helped push homeowners to move over to green renewable energy. That process will require you to become the owner of your energy, then you don’t have to rely on the power utility company to provide energy for you. The incentives for solar comes in different ways but taxes have been optimized to reward you for the specific size of the panel. The fight for global change has pushed these incentives but as they become more common, the incentives become a lot lower. If you want the most benefits from solar, the time to go solar is now. 

 

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Solgen Power is a solar energy equipment company that sells and installs solar for homeowners. Solgen Power has been recognized by INC. 5000 as one of the fastest growing companies in the nation. Solgen Power has grown nationwide and continues to provide excellent customer service to homeowners.

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Ever drive down the road and you get blinded by the sun as if there was a solar flare? Those same blinding rays of sun can be harnessed into electricity and dispersed throughout your household. That big yellow ball of fire in the sky isn’t only to provide energy to plants, but it is now used to provide energy to our home and items in that home. Imagine charging your phone using power derived from the sun, it’s possible and highly beneficial. You can learn more about the benefits of solar energy here in our blog on 5 Benefits of Going Solar. 

Solar installation in Ohio by solgen power

Solar installation in Ohio by solgen power

In early human civilization, humans had already used solar energy to create fire and sunrooms. Sunrooms are rooms that are designed to use the energy of the sun to warm up

Sunlight hits a solar panel and the panel then converts it into electricity that then can be harnessed and used throughout your home. The photovoltaic effect is the process of how materials generate voltage and electrical current when exposed to light. This all happens in a solar panel to create electricity and then a solar inverter is used to convert DC to AC electricity. A net meter will track and measure the usage of energy in your home. It can also produce thermal energy which is also used for homes and businesses for heating up the buildings, rooms and the water heating system. 

Benefits Of Solar Energy

Even with snow on your panel during these cold times, light is able to reach the panels and provide energy to you. The solar energy provided to you by the system will feed your whole household power and help drive down the cost of energy bill per month. For a lot of Americans, utilities are an obstacle to get over. It is needed in order to keep things going in your home, like keeping food cold in the fridge. One of the most beneficial things solar brings is non dependency, being able to not depend on other energy options and now having more available options for people to choose from. Solar panels have made it so that people can start taking ownership of one of the energy sources they use. Solar frees them from the monopoly of utility companies, there are options. 

What being clean means is that there was no pollution created while the energy was being made. Coal-fired power plants use the burning of coal to create heat so that water steams up and creates pressure into turbines that produce electricity. Burning coal produces plenty of smoke, sulfur dioxide, nitrogen oxide, carbon dioxide, mercury and other metals. Burning coal has already polluted the planet and damaged ecosystems. That is why green options like solar energy were created. 

 Some have been credited by the city for sending power back to the grid. It helps you with lowering your utilities every single month and therefore making it a great investment. Solar energy and getting it installed in your home helps drive the equity up while saving every month. Depending on your location, the amount of equity going up varies. Even the Government provides a credit in tax season for getting solar installed, that is due to moving to a renewable option. This incentive is to help boost people’s decision to switch to a cleaner alternative. There are plenty of financial benefits that you get from going solar, it makes it one of the most beneficial and rewarding investments. 

Installing a solar panel on the roof of a customer

Installing a solar panel on the roof of a customer

 Some have been credited by the city for sending power back to the grid. It helps you with lowering your utilities every single month and therefore making it a great investment. Solar energy and getting it installed in your home helps drive the equity up while saving every month. Depending on your location, the amount of equity going up varies. Even the Government provides a credit in tax season for getting solar installed, which is due to making the switch to a renewable option. This incentive is to help boost people’s decision to switch to a cleaner alternative. There are plenty of financial benefits that you get from going solar, it makes it one of the most beneficial and rewarding investments. 

Why Is Solar Energy Clean?

Solar Energy is a clean alternative energy resource rather than harmful energy resources like fossil fuels. No more buildings pumping out smoke and toxins just to provide energy, there are cleaner options already in the market. Solar expels no pollutants and the parts that make up solar power systems are recyclable. Solar energy is a renewable energy source which means that the resources for energy will never go away and as time goes on, will provide a means to an end.  Solar energy being clean and renewable provides a good sense of direction to problems we face today.  

 

Even thermal energy is a lot safer than gas heating. Gas heating always provides a danger since it becomes hazardous from inhaling or it being highly flammable. Using solar as heat to warm up objects that would regularly require fire is a prime example of how clean using energy from the sun really is. As more people move to solar, the need for more harmful energy options will disappear, helping make this world become green for everyone. Saving this planet is the ultimate goal and even though we are stepping in the right direction, we still have plenty to do.