What is the Federal Solar Tax Credit?
The Federal Solar Tax credit, also known as the Investment Tax Credit (ITC), is a major federal initiative that supports solar growth throughout the nation. Equal to 30-percent of the total installation cost, the ITC allows homeowners and businesses buying solar to see a much quicker return on their investment.
With no cap, the deduction includes every aspect of a solar installation for commercial and residential projects alike. Should you need to have your roof repaired or replaced in order to go solar, those costs can be deducted as well.
These savings don’t include the added benefits of state incentives, like SMART. However, SMART incentives are also facing a decline.
Current Federal Tax Credit Breakdown:
Societal Impacts of Clean Energy Policy
While rewarding the owner of the solar system, clean energy incentives like the ITC also boost the economy as a whole. This incentive amplifies society’s demand for solar power, which in turn increases the need to fill solar jobs. Solar is one of the fastest-growing job markets in the US today, creating huge economic growth. The solar industry alone accounts for nearly 250,000 jobs across the country and continues to expand with over 25 states seeing growth in 2018. The industry contributed $17 billion to the US economy in 2018 alone.
Greater solar adoption also helps make clean energy the norm and even the expectation. The ITC is so compelling to homeowners and businesses that it helps both the state and nation to meet its renewable portfolio standards (RPS) and climate goals. Since it was originally enacted in 2006, the ITC has contributed to solar industry growth of more than 10,000-percent. These results pushed the renewal of the ITC in 2015. Incentives influence many to go solar, making it much harder to decrease our carbon footprint without them. The ITC is propelling America into an affordable, clean energy future.
Disappearing Solar Incentives
With all these benefits, the ITC may sound too good to be true, and in a way it is. This tax credit isn’t going to be around much longer. In fact, the 30-percent credit won’t exist by the end of 2019. In 2020, the ITC will drop four percent to 26-percent, and in the following year it will drop again to 22-percent. By 2022, the ITC will be gone completely for residential installations.
New Federal Tax Credit Breakdown:
Over the next few years, that’s a $1,800 savings loss and after 2022, the ITC will no longer exist. As of right now, there’s nothing in place to offer savings this substantial, creating a major loss for those who wait to go solar.
Currently, lawmakers are submitting proposals to extend the ITC at its full 30-percent rate. Senators and representatives claim these proposals “create jobs, bolster the economy and address climate change.” While this initiative brings hope, there is significant uncertainty, especially with big elections looming on the horizon.
How Do State Incentives Play a Role?
If you’re considering going solar, there’s no time like the present. But, this isn’t a secret. The ITC drop is motivating homeowners to begin the solar process now, causing state incentives to dwindle.
The Solar Massachusetts Renewable Target (SMART) program is another incentive to go solar that’s exclusive to Massachusetts homeowners and businesses. However, SMART’s available incentives decrease as more people take part. Those who make use of the SMART program sooner will receive greater financial gain compared to individuals who wait. With people rushing to install before the end of ITC, SMART blocks are filling up quickly causing state incentives to dwindle. Not only should you begin your solar journey now to take advantage of the ITC, but also to beat out your neighbors for shrinking SMART incentives. These multilayered savings make solar an affordable, worthwhile investment.
Claim Your Solar Savings
Whether you’ve been planning to go solar for some time now or are just beginning to consider the idea, we highly recommend taking the leap. Dirty electricity from the grid is far more expensive than producing your own energy.
To ease the decline of the incentives, we’re offering an exclusive deal to those who go solar this October. It’s not too late to maximize your savings, so reach out to begin your solar journey.