Learn about the details of the tax incentive when you install solar on your property.
For many years and close to completion, the government in the United States decided to financially incentivize homeowners and business owners in their transition to renewable energy, more specifically when they install solar panels on their homes or properties.
For projects installed during 2022, the government will grant a tax credit of 26% on the total cost of your solar system (without any cap), also the IRS has explicitly communicated that this incentive will decrease to 22% for installations that take place in 2023.
For example, if the solar system you own costs $38,250, you can claim a Federal Tax Credit equal to $9,945 at the time you present your annual taxes.
So how do you know if you’re eligible?
Just as you must review a series of factors in detail to know if you can carry out the installation of solar panels in your home, you must also validate if you are eligible and can benefit from this tax incentive, so you must take into account:
- Solar system installation must be done between January 1, 2006, and December 31, 2023.
- Solar panels are installed at your primary or secondary residence in the United States.
- You are the owner of the solar system, you bought directly or through a bank loan the complete installation project of the solar panels.
- The solar system is new and is just installed or you are using it for the first time. It does not apply to you if you are buying a property that already had solar panels previously installed.
Maybe you are still wondering what does this tax credit cover?
On IRS form 5695 you can enter the total value of your solar panel installation contract, which generally includes:
- The cost of the equipment (photovoltaic panels, inverters, wiring, mounting equipment)
- The labor costs for installation; include permit fees, inspection costs, and developer fees.
- The cost of energy storage devices, better known as solar batteries
- Now that you know this information, are you sure if you can apply for this tax incentive?
We know that there are several aspects that you must take into account in a solar installation project, and our expert consultants can solve all your concerns. Click here to contact them now and receive honest and professional advice.