There are tax incentives for installing solar systems. Namely, here is solar investment tax credit (ITC), sometimes also referred to as federal tax credit (FTC).
Here is some general information on the solar ITC:
- The ITC applies to both residential and business solar systems.
- The credit is applied to taxes owed in the amount of 26% (in year 2020) of the net cost of the solar installation.
- Installation costs include the system, labor, fees, batteries, taxes, and certain remediation costs to enable installation of the system (e.g., main electrical panel upgrade, roof repairs, or cool roof installation).
- Any incentives (e.g., utility, state, or other) need to be deducted to arrive at the net cost.
- There is 26% credit for systems on which construction began before the end of 2020; 22% in 2021; 10% in 2022; in and after 2023, the residential credit is eliminated and is 10% for commercial.
- This is a credit – not a deduction; therefore, it is worth dollar for dollar.
- The credit is not considered income, so you do no owe tax on it.
- You need to owe at least the same amount of tax to take advantage of it, and you can carry it over to subsequent years.
- If you are the primary owner for multiple homes, then credit needs to be pro-rated for each home based on the amount of time you live in each home.
- There is no limit to the credit.
The information above is general guidance, not tax advice.
Please consult a tax professional about how the ITC might apply to you specific situation.