The Federal Solar Investment Tax Credit
Of the many solar incentives available, the federal solar tax credit (known as the Investment Tax Credit, or the ITC), can offer big savings on the cost of going solar. Good news for homeowners and businesses as the tax credit was extended for an additional two years at the end of 2020. Under the new schedule, the federal solar tax credit allows you to reduce the amount of federal taxes you owe by 26% of your total installation costs in 2021 and 2022. And if that 26% is larger than what you owe in taxes, you can roll the remainder over for another year!
Plus, as long as your solar battery system gets 100% of its energy from renewable sources, your solar battery storage system can also qualify for the tax credit.
To be eligible to claim the solar tax credit, you must own your solar panels (no leasing), have sufficient taxable income, and own the property where the solar energy system is being installed.
This solar tax incentive started at 30%, but is declining and it will drop again to just 22% in 2023 before it is eliminated for residential systems in 2024. After this, only commercial solar energy systems will be able to benefit from the solar tax credit at a rate of 10%.