By A.M. Sun Solar
Thinking about switching to solar? With changing legislation, sooner is better for your pocket. Purchasing and installing a solar energy system before 2020 will ensure you could be eligible for the maximum 30% solar investment tax credit (ITC). Be sure to check with your tax professional to see if you qualify for a tax credit.
For commercial and residential properties, the ITC is 30%. This means 30% of the amount you spent on purchasing and installing the system will be credited toward your tax liability, dollar for dollar. But like all great deals, this won’t last long.
Starting on Jan. 1, 2020, ITC for both commercial and residential will drop to 26% and continue to drop. By 2022, Commercial properties will be left with 10% ITC for solar power systems while residential properties will no longer be granted credit.
Here’s the schedule of declining ITC:
With the end of the year on the horizon, it is important to begin the process of installing a solar power system. There are many steps to take, so it is better to start now. Complete installation of the system by Dec. 31, 2019 will ensure that you receive the maximum 30% ITC.
What happens if you wait? Solar prices are expected to increase by 4% which means more money out of your pocket and less credit towards your tax liability. And the longer you wait, the less you get back. The increase in prices and decrease in ITC starting in 2020, installing now is the best deal you will receive.
All hope is not lost on Jan. 1, though. The ITC is implemented by the federal government, but state governments have the power to implement initiatives for solar power or other renewable energy. While ITC may be decreasing, the fight for energy reformation is still very much alive.
Currently, California has a Renewable Portfolio Standard (RPS) which calls for 60% of the state’s energy to be renewable by 2030 and have zero-carbon emissions by 2045. Bills like these pave the way for more energy reformation as well as inspire other states to follow suit.
Before 2020 arrives, take advantage of the full 30% ITC for your new solar energy system. The sooner the journey begins to clean energy, the better. Make sure to keep all copies of receipts related to the purchase and installation of your system. And remember to fill out the Residential Energy Credits (Form 5695) along with federal income tax forms to ensure you receive your ITC.
If you’re interested in learning more about the changing tax credit, contact A.M. Sun Solar at 805-772-6786. Don’t wait! Click here to request your free solar consultation today to see if you qualify for the solar tax credit and solar energy savings!