If you’ve done any research into going solar with your home, you’ve likely heard about a federal solar tax credit (sometimes referred to as the Income Tax Credit, or ITC) currently being offered to homeowners and businesses. So what does it really mean for your residential solar installation? How can you best take advantage of this seemingly confusing financial incentive?
At Pure Power Solutions, we know that any smart homeowner will have a lot of questions before going solar. We pride ourselves in being the go-to resource in Northern California for all of your technical or financial solar queries, so let’s get into the nitty gritty of how this federal tax incentive actually works!
How Much Is The Federal Solar Tax Credit Worth?
This financial incentive was established by The Energy Policy Act of 2005. Since its inception, it has expanded from a $2,000 credit limit to a no-limit, 30% credit based on the installation cost of a residential or commercial solar electric system. What this means is that if you’ve spent $25,000 on installing solar panels on the roof of your home, you can claim $7,500 of that cost and deduct it from what you owe the federal government in taxes.
Depending upon how you pay your taxes, this can mean a large tax refund, or at the very least, you won’t have to pay nearly as much come April 15th. But what if that $7,500 is much more than what you owe?
The Federal Solar Tax Credit Can Roll Over To Next Year
Let’s say you only owed the federal government $5,000 for the year you had your solar electric system installed. You may be thinking, “Oh no, that’s $2,500 in tax credit gone to waste!” But in fact, you can use the remainder of the deduction as long as you own your solar system. So the next year, you can plan on applying that $2,500 on your taxes. Not a penny goes to waste!
What’s more is that this also applies to battery storage systems. So, if you are looking to use renewable solar energy night and day, as well remove your home from the electricity grid entirely, you can either upgrade your current solar electric system with a battery storage system or include a battery storage system in your current installation plans. (Read up on how a battery storage system protects your home during a natural disaster). Adding a battery storage system increases the amount you can claim on your taxes, since there is no limit on the 30% tax incentive.
Save on Energy, Save On Taxes with Pure Power Solutions
Conserving energy in your home will always be an important part of being a homeowner here in Northern California. But saving money on electricity costs and on your taxes is important to every homeowner! So when you are ready to capture the energy of the sun for use in your own home, look no further than the Sonoma county experts at Pure Power Solutions. We keep our experts standing by to answer all of your solar questions — from installation to solar taxes. We will even do a site evaluation and give you a quote, so you can see exactly what a solar system will look like for your home and energy bill.