30% Tax credit Simplified

02/10/2019

In 2005 congress passed the energy policy act that included the investment tax credit, its popularity over the years have granted it multiple extensions. So, what is the investment tax credit (ITC)? The ITC is a 30% federal tax credit that you receive once you've installed solar panels on your home or business. This is normally when I get hit from every angle with questions so I will just dive right into an example. Lets say you get a solar system that cost $30,000 @ 30% you would get $9,000 back in credit. Lets then say that you pay $10,000 / year in federal taxes, now you only owe $1,000. The average american according to the motley fool pays $8,367 / year in taxes. Sticking with this example what happens to the extra $633? You can carry that over into next year. At this point it is still unclear if you can carry over credits past the ITC existence (2022).

Since the ITC has been put into place in 2005 solar has grown over $1,000% in the U.S. This is the last year that the 30% credit is given (2019), next year it will dwindle down to a respectable 26% (2020), followed by another drop in 2021 (22%). Beginning in 2022 you are no longer able to receive this credit on a residential system, and commercial properties will receive only 10% of the ITC. To be brief, you need to pull the trigger sooner rather than later. Clearly I could break down numbers to you all day to show you that, but i'm sure you realize the difference between 30%, 26%, and 22% of a large purchase like solar panels. Anyone that pays taxes at the end of the year should strongly consider going with solar panels. We strongly recommend that you consult your tax professional regarding the ITC, to make sure that we did not miss anything, and to verify everything that we just addressed. Just imagine, you go into the car dealership and are about to make a purchase of $30,000 and they tell you that you get 30% off...................