What is a solar tax credit?

The federal solar tax credit allows you to deduct up to 30% of the cost of installing solar energy systems in homes and industries in the U.S. There is no cap to the value of the system installed, and this deduction applies to both residential and commercial solar system installations.

Today, the solar tax credit is still available to both home and business owners. Here are some of the details:

- 2019-The solar tax credit remains at 30%

- 2020-Homeowners and commercial solar system installation will benefit from a 26% deduction

- 2021-Homeowners and commercial solar system installation will benefit from a 22% deduction

- 2022 onward-Only owners of new commercial solar system installation will benefit from a 10% deduction of the cost of installation. There are currently no federal tax credits for residential solar system installations from 2022 onward

There was a time when, as the owner of a newly installed solar system, you couldn’t claim your deductions until your solar system was up and running. Now you can file your claim as soon as the installation process for solar power begins and as long as your solar energy system is up and running by the Dec. 31, 2023.

What are the benefits of the solar tax credit?

- The benefit of the solar tax credit for a taxpayer can essentially be boiled down to the benefits of installing a solar system in your own home or your business. The very first advantage is the fact that you get to claim 30% of the installation costs with no cap to how much your system costs.

For example, if you got a system that costs $10,000 you can claim 30% of that and have a tax credit of $3,000. Should your neighbor install a solar system worth $100,000, they get to claim $30,000.

The solar tax credit also has the following advantages:

- It has made solar energy more affordable for many home and business owners.

- It encourages home and business owners to buy their own solar panels-leasing disqualifies you from the tax credit.

- It helps you save money both during the installation of the solar system.

Thanks to the solar tax credit, you start saving money from day one. Even the fees that go into consultations with a professional solar energy expert count as part of the installation costs.