In 2016, Congress approved a federal solar tax credit that they continue to renew each year. Also called the investment tax credit (ITC), this offer lets individuals or businesses deduct part of the cost of installing solar panels from their federal taxes. Use this guide to understand how much the tax credit is worth and how to utilize it.

What Is a Tax Credit?

Every year, you owe the government a certain amount of tax money. A tax credit is an amount of money you can subtract from the total of what you owe. For this specific credit, you need to be the owner of the energy system and have the installation process started in 2019.

How Much Is It For?

The current rate of credit is 30% through the end of 2019. This means that you can deduct nearly one-third of the cost of your solar energy system from your yearly taxes. That percentage is only valid through 2019, however. In 2020, the rate will decrease to 26%, and then to 22% in 2021. There is no cap to the credit’s value.

How Do You Claim the Credit?

You will need to claim the credit when you file your annual taxes. Form 5695 calculates and validates your credit, which should be included in your 1040. Always consult with a tax adviser if you are unsure how to proceed. If your credit is more than what you owe in taxes, the remaining credit will roll over to future years.

What Are the Benefits? 

On top of saving money on taxes, solar panels lower electricity bills, are sources of green energy, and increase your home’s resale value. According to National Renewable Energy Laboratory, solar panel houses sell 20% faster than homes without, and for 17% more money.

 

If you’re considering solar panels for your home, let Star City Solar in Miamisburg, OH, help you harness the power of the sun. Star City Solar services the Dayton, Cincinnati, and the rest of south central Ohio.  Their trusted technicians will help you choose between ground or roof panels so that you find the perfect renewable energy solution for your home. They can even estimate your annual utility savings beforehand. Learn more about their services online, or call (937) 572-5497 today to schedule an appointment.