30% Solar Tax Credit | What Is It And How Much Can You Actually Save?
Updated: Oct 3, 2018
If you’re tired of paying high electric bills now’s the time to go solar. Recently the Federal Government extended the uncapped 30% tax credit until 2019 - leaving you just a little longer to get your system installed and claim thousands of dollars off your taxes.
What is the solar tax credit?
The solar tax credit (also called the investment tax credit ITC) lets you deduct 30% of the cost of your solar system until the end of 2019. So if you’ve considered removing yourself from the grasp of your local power company, now might be the best time. Following 2019, the deduction will drop to 26% in 2020 and 22% in 2021. The credit will be gone for residential installs in 2022 but a small 10% credit will still be available for commercial installs moving forward.
The tax credit is “uncapped” meaning there’s no limit to the size of system you can claim. For example, if you bought a $100,000 system, you would save the same 30% that you would if you bought a $5,000 system. So let's do a little math to illustrate the point further. Let's say you bought a $20,000 solar system:
2018/19: You’re able to claim $6,000 of tax credit
2020: You’re able to claim $5,200 of tax credit
2021: You’re able to claim just $4,400 of tax credit
2022 and beyond: Residential installations are no longer qualified.
The other exciting part about this example is that we haven’t included the savings you’ll get on your monthly power bill - which could be several thousand dollars each year. And on top of that, you’re saving the world by using a renewable source of energy. So its clear there’s many benefits to going solar - beyond the tax credit (which is big).
Anyone who owns a residential system is eligible for the tax credit. However, you need to actually own the system - meaning you’re not leasing your panels. To fully take advantage of the solar tax credit in your home, there’s a few things to be aware of and keep in mind when you’re shopping around.
In order to take full advantage of the tax credit, you’ll first need to owe enough in taxes. What this means is that, if you buy a $20,000 system before 2019, you can claim $6,000 as a write off on your taxes. But if you only owe $3,000 in taxes, then you’ll only be able to write off your $3,000. That being said, the tax credit can be rolled over to the next year so you can claim the remaining $3,000 on your next income tax report as long as the tax credit is still in effect.
If you’re going solar this year, keep in mind that it takes time to get the install fully complete and plan accordingly. Waiting until winter can mean the install gets delayed by rainy weather, for example, and may not be installed in time for you to collect your full tax credit. So consider getting the job done earlier in the year so you can take full advantage of the time and tax credit.
You’ll claim your tax credit at the end of the year when you file. You can simply print and fill out the one page “Residential Energy Credit” form (click here to get the form).Tips when you’re shopping for solar
Going solar and finally getting out from under high utility bills is very exciting. But before you invest in an expensive solar system, there’s a few things to keep in mind while you’re shopping.
Solar has been rapidly expanding in popularity over the last decade and with the solar tax credit, new companies have been popping up left and right. However, many of these companies have gone out of business just as quickly as they got in - leaving homeowners with expensive solar panels and no-one to service them.
When shopping for a solar company, search for one that’s either been in business for several years or backed by a larger solar manufacturer that’s been around for several decades and warranties their product. This way you won’t be one of the unfortunate homeowners with an expensive solar system and no warranty coverage.
Speaking of warranties, look for a company that manufactures their own whole systems and warranties the install. Many companies warranty the panels, but not the frames or other expensive parts that are manufactured by companies other than their own. What this means is that, while your panels are covered by your solar company, if a frame, bracket, or other part breaks, you’re stuck coming out of pocket for costly repair bills.
Sunpower by the Solar Quote specializes in Sunpower panels which have been in business for over 40 years. The panels, brackets, and all other parts involved in your solar install are manufactured and warrantied by Sunpower - meaning you’re fully covered if something goes wrong. Further, Sunpower by The Solar Quote is a master dealer of Sunpower products meaning we get the best prices and huge savings - which we pass on to you.
If you’re considering solar, give Sunpower by The Solar Quote a call. We’ll send one of our highly trained solar specialists to evaluate your energy requirements and give you a detailed, low pressure, same day estimate. Our team will take satellite imaging of your roof, factoring in things which may cause shade such as trees, peaks on your roof, pipes, sun position over the year, etc. and then create a system that’s built to provide you maximum power with the least amount of panels, 365 days a year.
For more details, or to get a custom quote from one of our specialists, call Sunpower by The Solar Quote to set an appointment.