In 2020, the federal solar tax credit (ITC) is 26%.
[UPDATE: Legislation was passed in Dec. 2020 to extend the 26% ITC.] If you’ve been thinking about getting solar power for your home, now is the time to act. The federal ITC is sunsetting for residential homes. Get started on your new solar array now to ensure you capture this money-saving credit.
The federal solar tax credit, also called the solar investment tax credit (ITC), is a nonrefundable credit currently set at 26% of your solar array cost. This includes panels, installation, equipment, permitting, and more.
If the cost of your installed solar array is $20,000, you would save $5,200 in federal taxes. Not bad right?
Again, the most important part is to get started on your solar installation now! Because this solar tax credit is only decreasing in value from here on out.
Federal Solar Tax Credit Over Next 3 Years
Taking advantage of this tax credit now will allow you to realize near immediate savings on your new solar energy array. You’ll standardize your monthly energy costs and be positioned for huge energy savings. But you will also be enjoying a sizable decrease in the amount owed on your taxes. And this credit amount isn’t increasing anytime soon. In fact, the incentive will be dropping 4% in the next several months:
-Federal Solar Tax Credit in 2020: 26%
-Federal Solar Tax Credit in 2021: 22%
-Federal Solar Tax Credit in 2022: 0%
[SEE UPDATE ABOVE]
Getting started on your solar installation now is the only way our team of in-house solar experts can help you lock in that 26% tax credit. Waiting longer means you could miss out on the extra 4%.
Requirements to Claim
The federal solar tax credit is nonrefundable. A nonrefundable tax credit is a reduction of the income tax you owe. It is different from a rebate or refund, because you have to owe taxes in order to claim the incentive. Unfortunately, you can’t lower your tax liability below zero. However, the majority of people end up owing on their taxes so there’s a good chance you’re eligible.
Disclaimer: We at MOXIE are solar experts but not tax accountants. While we highly recommend taking advantage of this credit, please check with a tax professional to be certain that you’re eligible to claim the ITC.
Claiming the 2020 Solar Tax Credit
If you are eligible for the 2020 Federal Solar Tax Credit you need to file IRS Form 5695 when you file your return. This form covers any Residential Renewable Energy Tax Credits and allows for nearly all solar related expenses to be claimed.
The MOXIE Client Services team will help you complete all the necessary paperwork and navigate the filing process.
Essentially all aspects of a MOXIE Solar build can be claimed including:
- All Solar equipment (modules, inverters, railing, flashing, wiring, screws, etc.)
- All Contractor expenses (design, permitting, engineering, installation, electrician, and monitoring)
The sky is the limit for solar power!
The Cost of Not Going Solar in 2020
If a 26% tax credit on your solar energy array isn’t enough motivation to contact MOXIE today, consider the long-term costs of not going solar, besides the tax credits and rebates.
If you choose to not install solar, you will be forced to continue paying the utility company a varying monthly rate. When energy rates increase (typically about 5% per year) your only option is to pay more for utilities.
When you go solar with MOXIE, we help find financing. When the solar array is paid off, you essentially become your own utility company.
Lastly, installing residential solar has proven to increase the value of the home. The Appraisal Institute estimates that each kilowatt of solar capacity added to a home could add about $6,000 in home value.