With Phoenix Exteriors, homeowners qualify for the Federal Solar Tax Credit when they own solar systems, but what is it and does it actually benefit you? For 2021, the ITC provides a 26% tax credit on your installation costs such as cost of solar panels, labor costs, any and all additional solar equipment, home batteries charged by solar equipment, and sales taxes on eligible expenses. This is provided that your taxable income is greater than the credit itself. For most homeowners, this effectively translates to a 26% discount on your home solar system and on average homeowners save about $9,000 with this tax credit. However, now is the time to invest in solar for your home since it is likely that the 26% will decline to 22% by as soon as 2023.
It isn’t a check you’ll receive, but rather when you file your yearly federal tax return, the amount is applied against your tax liability or the money you owe to the IRS. So, it won’t be added to your tax return, but it’ll be a discount for other areas of your taxes. All you have to do to be eligible is invest in your own home solar system! Here is a comprehensive list to double check your eligibility for the tax credit:
- Your solar photovoltaic (PV) system was installed between January 1, 2006 and December 31, 2023.
- Your solar PV system was installed on your primary or secondary residence in the United States.
- For an off-site community solar project, the electricity generated is credited against, and does not exceed, your home’s electricity consumption. The IRS allows a taxpayer to claim a section 25D tax credit for purchasing a portion of a community solar project.
- You own the solar PV system, meaning you purchased it outright or financed it with a loan. You did not sign a lease or PPA.
- Your solar PV system is new or being used for the first time—the credit can only be claimed on the original installation of the solar equipment. For instance, if you bought a house that came with a solar system already installed, you would not be eligible for the credit.
If this at all interests you or you simply want to learn more, please visit us at phoenixexteriors.com to schedule an appointment with our consultants!