Making Finances Simple. Changing Lives.
Solar Tax Credit Changes
If you've been thinking about installing solar on your home, you may want to do it soon.
Solar Tax Credit, Explained
The Solar Credit provides a 30% benefit on taxes for the purchase & installation of a solar system. This includes the total cost, meaning system cost, installation, associated electrical work, required roofing modifications, etc.
Remember, credits are a dollar-for-dollar reduction in taxes.
The credit only applies to those who own the system (leases cannot claim the credit) and to those who have a tax liability to be offset by the credit.
For example, if you install a $30,000 solar system, you’d be looking at a $9,000 tax credit from the IRS. However, if your total tax liability is only $7,500 for the year, you would have to rollover the $1,500 difference ($9,000 - $7,500) to the following year.
As of 1/1/2022, the credit is no longer decreasing. There's a 30% credit through 2032.
The Credit Is Decreasing
For years, the credit has been 30% of the total system cost.
However, in 2016, the IRS introduced a step-down to the credit, meaning the percentage will begin to decrease starting with the 2020 tax year. See below for the future credit schedule.
Placed in service after December 31, 2016 & before January 1, 2020: 30%
Placed in service after December 31, 2019 & before January 1, 2023: 26%
Placed in service after December 31, 2022 & before January 1, 2024: 22%
Comments are closed.