2020 is the last year the federal solar tax credit will be at 26%.
If you’ve been thinking about getting solar power for your home, now is the time to act. The federal government will soon be sunsetting the solar tax credit for residential homes, but getting started on your new solar array now will help ensure you lock-in this money-saving credit.
The federal solar tax credit, also called the solar investment tax credit (ITC), is a nonrefundable credit that is currently set at 26% of your total solar array cost, including the panels themselves, installation, equipment, permitting, and more. So, if the total cost of your installed solar array is $20,000, you would owe $5,200 less 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. Not only will you be standardizing your monthly energy costs and positioning yourself for huge energy savings down the road, but you will also be enjoying a sizable decrease in the amount owed on your 2020 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%
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 quickly miss out on the extra 4%, which equals $800 less in immediate savings on that $20,000 install example.
Requirements to Claim
Keep in mind that 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’ll be 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 Federal Solar Tax Credit for 2020.
Claiming the 2020 Solar Tax Credit
If you are eligible for the 2020 Federal Solar Tax Credit you will simply need to file IRS Form 5695 when you file your 2020 tax 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 Cost of Not Going Solar in 2020
In case getting 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 – 2020 tax credits and rebates aside.
If you choose to not install solar, you will be forced to continue paying the utility company a varying monthly rate. And when, not if, energy rates increase (typically 5% per year) you will have no choice but to pay more, more, more on your utility bill.
When you go solar with MOXIE we work with you and your unique situation to ensure you’re setup with a quality loan payment that immediately lowers your out-of-pocket monthly utility cost. Then, once your solar array is paid off, you’re not paying anyone and 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.