What is the 30% Solar Federal Tax Credit?
August 25th, 2022
The solar market has been high in demand with plenty of businesses and homeowners looking at greener energy options. Reducing the carbon footprint that one expels during any given day will help us in combating climate change. The planet in recent years has been impacted harshly by the severe elements of our planet and we must unite as one to help save this world for future generations. To help increase the amount of renewable energy usage, the government has provided a tax incentive for homeowners that get solar installed.
Perfect solar installation on the side of the home
This means that homeowners that had solar panels installed can claim the cost of solar on their taxes and receive a tax credit back that year. Over the last several years, you could only claim up to 26% of the total value of the solar system on your taxes. Recently, Congress just approved increasing the amount of The Solar Tax Credit to 30% for the next 10 years starting August 12, 2022, taking effect immediately.
What is the Purpose of the Solar Federal Tax Credit
The solar tax credits started in the year 2005 under the Bush administration but they did not start to affect homeowners until the last quarter of 2007. At the time, The Solar Tax Credit also had a cap of $2,000 which didn’t help the growth of solar at the time. Obama went on to remove the $2,000 cap on solar tax credits to help grow the need for renewable energy. The solar industry started to grow rapidly after tax credits were given to those that got solar panels installed. The Federal Tax Credit helps homeowners make the switch to solar by giving them back a piece of what they spent on the system, thus helping the homeowner recuperate some of the money spent on becoming owners of solar panels. For large solar panel systems, you can receive a substantial portion back during tax season. So as of now until the year 2033, you receive close to one–third of the cost of your solar panel installation back in your pocket.
How Do You Get the Solar Federal Tax Credit
The Solar Federal Tax Credit only affects homeowners that got solar installed in that given year for the specific amount that year was providing for credit. Homeowners must file out paperwork to be able to receive the credit. The credit will not come to you automatically when you purchase your solar panels, you only get them when you fill out the solar tax credit form that the IRS provides on their website. Tax Form 5695 will have you fill out information about your solar panels. When tax season comes, you will get up to 30% back from the total of the purchase through your taxes in a lump sum
Getting Qualified for Solar Tax Credit
- Getting qualified for The Solar Tax Credit is easy and only requires you to look at a couple of things before you get started.
- Solar panels must be installed in 2022(Up till 2033) on your property.
- Must be a homeowner.
- You must own the solar panels.
- You need to have income that is taxable.
- You must claim the solar tax credit for the year it was completed. (Installations done in 2022 will be credited on 2023 tax season.
Since the Federal Solar Tax Credit has been available to the public, the amount of solar installations has increased dramatically. The government designed a way they can help you with the cost of solar panel installations and make it that much easier to switch. You now have a system that has been partially paid for by the government producing green energy for your family to use. Not only does it battle climate change, but it also gives you ownership of your own power. Solar energy is one of the cleanest energy sources in the market and is more readily available to the consumer. The solar tax credit has helped solar technology grow, homeowners save money, and improve climate change. With this recent increase in solar tax credit, you will see another boom in solar panel installations. There has never been a better time to go solar than right 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.