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Act Now to Take Advantage of the Solar Tax Credit

May 14, 2020 | Comments Off on Act Now to Take Advantage of the Solar Tax Credit

You’re probably already aware that you can lower your energy costs and have a positive impact on the environment by converting to solar. What you may not know is that there is a substantial tax credit available when you install a new solar energy system. Read on to learn more.

What Is the ITC?

In 2005, the federal government began offering an income tax credit when businesses and homeowners install solar panels. Called the Solar Investment Tax Credit (ITC), the program was designed to encourage more people to move off the utility grid and obtain their power from alternative energy. Since its enactment, the use of solar power has grown by over 50% each year. You can learn more by researching solar ITC New Jersey or listings in your home state.

How Does the ITC Work?

For 2020, the ITC provides a 26 percent tax credit for both residential and commercial installations. That means that more than a quarter of the cost of your system will go toward decreasing your tax burden! To qualify, you must own the system as opposed to leasing it. When you file your annual tax return, simply claim the credit by completing IRS Form 5695 and adding the information to your tax form. If your tax liability is less than your ITC, you can carry over remaining credits to future tax years.

Is the ITC Ending?

Unfortunately, the solar ITC for residential installations will expire after 2021. Although it will still be available for commercial systems in 2022 and beyond, the deduction will be greatly reduced. To take full advantage of the credit, you should act immediately.

The ITC provides a big financial incentive to install a solar energy system, but you must move quickly. This valuable tax credit is only available for one more year.