Pay less taxes and lower your energy bills.

Can you really lower your taxes by also lowering your electric bills?

The solar Investment Tax Credit (ITC) is the most important federal policy supporting the switch to solar energy in the United States. It provides a direct reduction in your federal tax liability by 30% of the total cost of the solar system installed.

The ITC is a tax benefit for solar systems on both residential and commercial properties.  It has helped annual solar installation grow by over 1,600 percent since 2006 . The existence of the ITC through 2021 provides market certainty for companies to develop long-term investments. These investments have driven competition and technological innovation, which in turn, lowers costs for consumers. The Investment Tax Credit (ITC) is currently at 30% but that is scheduled to sunset after 2019.

A business that develops and/or finances the project may claim the credit instead of the business that uses the power.  That means in the case of a lease or a power purchasing agreement the tax credit will stay with the developer. However, standard financing of a project allows a business to retain and take full advantage of the tax benefit.

This tax credit is a dollar-for-dollar reduction in the income taxes the company claiming the credit would otherwise pay the federal government. The ITC is based on the total amount of investment in the solar project including the design and site work directly related to the installation. You may not take the tax credit for re-roofing as a precursor to solar installation. The IRS wording is a little vague but use caution when a solar provider tells you that re-roofs also count. Consult a tax specialist for exact exceptions and rules.

The sunset is coming soon.

The ITC then steps down to 26 percent in 2020 and 22 percent in 2021. After 2021, the residential credit will drop to zero while the commercial and utility credit will drop to a permanent 10 percent. The Consolidated Appropriations Act, signed in December 2015, extended the expiration date for the solar credit, and introduced a gradual step down

30% for systems placed in service by 12/31/2019
26% for systems placed in service after 12/31/2019 and before 01/01/2021
22% for systems placed in service after 12/31/2020 and before 01/01/2022

There is no maximum credit for systems placed in service after 2008.

IRS Form 3468 : Investment Credit is the form that attaches to any return to claim the credit.

Now is the time to initiate an analysis of generating your electricity with solar. It can take some time to go through the design build process and the big credit is coming to an end.

Contact NAEA today to begin that no-cost, no-obligation Solar Analysis!