One of the best incentives for homeowners considering going solar is the IRS solar tax credit, also referred to as the investment tax credit (ITC). This program allows homeowners to be credited for 30% of the cost of a solar system and installation against their tax liability, significantly reducing the net cost they have to pay.
The ITC was extended recently by Congress through 2021 and will taper down in the upcoming years as follows:
Now is the best time to go solar while the ITC is at the highest level of 30%. This dramatically lowers the cost for a solar system and increases your ROI significantly.
Anyone who purchases a solar system for their home qualifies for the ITC. It is a tax credit that reduces dollar-for-dollar the amount a homeowner would have to pay the federal government. If you don't have the tax liability to use the entire ITC in one year, you can roll over the remaining amount of the credit to subsequent years as long as the ITC is in effect.
To claim the IRS solar tax credit, you fill out Form 5695 and enter the results on line 53 of Form 1040 or line 50 for Form 1040NR (Click Here for instructions for Form 5695). It is a straight-forward process, but we always recommend consulting with a tax professional when dealing with tax credits.
Many competing solar companies offer leases and PPAs instead of loan or cash purchase options. I will discuss the many reasons owning your solar system is the best financial choice in a forthcoming article, but an important differentiation is the ITC. Only homeowners who own their solar system via cash or a loan qualify for the ITC. Leases and PPAs do not qualify for the ITC so homeowners would miss out on an enormous savings opportunity.
I wrote previously about the economics of solar and the federal solar tax credit plays an important role in this investment. The ITC will not be around forever and will be reduced in the near future so now is the time to consider solar for your home.
If you are looking for the leading Albuquerque solar company and would like to learn about how the federal solar tax credit can save you money, please give us a call at 505-415-6172 or Click Here to schedule a free consultation. NM Solar Group is excited to help!