In 2015, Congress passed and extended a set of laws that allowed homeowners to deduct a significant amount – 30% – of the cost of their solar installation from their taxes. In case you haven’t heard, this extension, unfortunately, won’t be as helpful to homeowners going forward! We’ve all enjoyed the opportunity for full solar tax rebates for multiple years, but the end is near for the 30% rebate. If you’ve been on the fence about solar, it’s in your best interest to maximize the full solar rebates while you still can.
What Are Solar Rebates?
Under the Investment Tax Credit (ITC), the federal government allows homeowners and business owners to deduct 30% of the cost of installing a solar system from your federal tax filings. The ITC can be used for any solar installation, no matter the size or scope and can be applied for those who choose to install solar by the end of the year. On average, homeowners report saving about $5,000 on the cost of their solar by using the ITC when filing taxes. In light of the new tax plan, the Tax Cuts and Jobs Act (TCJA), where homeowners have less overall deductions to apply for, this tax rebate is especially beneficial.
The kicker is that the amount you can deduct under the ITC is set to be lowered at the end of the year, and will continue to be reduced through 2021. The deductible schedule is as follows:
- 2016-2019 – Homeowners and business owners can deduct 30% of the total cost the install of their solar system.
- 2020 – Homeowners and those with commercial solar systems can deduct 26% of the total cost of the solar installation.
- 2021 – Homeowners and those with commercial solar systems can deduct 22% of the total cost of the solar installation.
- 2022 and Beyond – Beyond 2022, business owners with commercial solar systems can deduct 10% of the total cost of the solar installation from their federal taxes. Homeowners will no longer be able to claim any deductions after this point.
Depending on the size of your solar install, the difference between these tax rebates can make a sizeable impact on the total amount you pay for your system. If you’re considering solar, now is the time to act.
Ready to learn more about what solar could mean for your home or business and how you can take advantage of these tax rebates before they are reduced? Contact Sandbox Solar for a free quote for your system and more information about how the solar rebates work and how you can take advantage of the full 30% rebate by the end of 2019!