Federal Solar Tax Credit (ITC)
You could save up to 26% on the installation of a new qualified solar system when you take advantage of the Federal Solar Investment Tax Credit (ITC). This program was extended through 2023 and provides a credit on your federal income tax return.
What is the Federal Solar Tax Credit (ITC)?
The Federal Solar Investment Tax Credit (ITC) is a credit the government will give you when you purchase a solar energy system for a residential or commercial property, or for utility scale properties. The credit is applied to your federal income tax return.
In 2020, Congress passed a COVID-19 relief package that included a two-year extension of the Federal Solar Investment Tax Credit (ITC). That means, the credit will stay at 26% through 2022.
Qualified homeowners and businesses may be eligible for a 26% credit on the cost of a new T & K Electric solar system through 2022. In 2023, the rate will drop to 22%.
The ITC makes it possible for residential homeowners, and commercial property owners to receive a percentage of the total installed cost of the solar system back in the form of a tax credit. These savings on solar make access to clean energy much more achievable.
How much can the federal solar tax credit save me?
Your solar savings will depend on when you install your solar system. In 2021 through 2022, the solar tax credit is equal to 26% of the cost of eligible solar equipment. In 2023 the solar tax rate credit will decrease to 22% and will be phased out completely in 2024.
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How can I receive my federal solar tax credit?
To receive your solar tax credit, you’ll need to fill out Form 1040 or Form 1040NR when filing your taxes. Instructions on filling out the form are available online through the IRS. Most tax filing software includes the solar tax credit by default, or let your accountant know that you purchased a new solar system.
How do I qualify for the federal solar tax credit (ITC)?
To qualify for the ITC tax credit you must meet the following requirements:
- Your solar system must be installed between January 1, 2006, and December 31, 2023.
- You must own your home.
- You must own your solar panels.
- You must pay enough federal income taxes to qualify for the solar tax credit.
For more information on how to qualify, you can reference the residential and commercial ITC factsheet provided by the Office of Energy Efficiency & Renewable Energy.
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