Q: What is the solar tax credit?
A: Officially called the “solar investment tax credit” or ITC, it’s a dollar-for-dollar reduction in the federal tax bill of any homeowner who pays for a solar installation.
Q: How much do I get back from the solar tax credit?
A: 30% of costs, through 2019.
If you’re a homeowner who buys a solar panel system, you’re entitled to a tax credit of up to 30% of the total cost of that system. You can wipe out your entire tax bill if your credit is high enough, and you can take the credit over 2 years if you don’t owe that much taxes. For example, if you spend $20,000 on a solar system, your 30% tax credit would be $6,000. But if you only owe $4,600 in taxes for 2015, your tax bill will be reduced to zero, and you’ll receive an additional $1,400 tax credit on your 2016 return.
Q: Will the solar tax credit expire after 2019?
A: Nope! The residential solar tax credit will continue at 30% through the end of 2019, then “step down” to zero after 2022.
Q: Why does the ITC exist at all? Shouldn’t the industry stand on its own two feet?
A: Lots of businesses get subsidies from the government, and solar is one of the most important future planning technologies there is!
Solar is a key part of our nation’s plan to get off fossil fuels and help make a more reliable, sustainable energy future. But the ITC does more than that; the taxpayer investment in solar creates jobs, reduces prices for solar for everyone, and ensures this still-new industry grows large enough to sustain itself for long into the future.