Federal Solar Tax Credit Overview (2023)
Solar energy is quickly becoming one of the most popular forms of renewable energy in the U.S. This focus on solar power has led to many homeowners and businesses switching to the technology as their main source of energy. The good news is that there are many advantages associated with this switch; including tax credits and other benefits that can be realized by using a solar power system in your home!
What is the residential solar tax credit?
The Residential Solar Tax Credit is a federal tax credit available to qualifying residential customers. The credit allows you to offset the expenses paid on your solar panel system with a 30% federal tax credit.
The Residential Solar Tax Credit was first introduced in the American Recovery and Reinvestment Act of 2009 (ARRA) and has since been expanded multiple times by Congress. In 2022, the credit was increased from 26% to 30%.
Who can get the solar tax credit?
The solar tax credit is available to anyone who installs a solar power system. To take full advantage of the credit, you need to have enough tax liability owed to receive the full 30% of the cost of the solar panel system. However, if you don’t have enough tax liability the first year, you can continue to claim the remaining amount on next year’s taxes and the same the following 4 years.
We always recommend checking with your accountant to see if you’ll be able to take full advantage of the solar tax credit. Our team can help you with designing your solar panel system so that you can share the full system cost with your accountant. You can get a solar panel system quote here.
How does the federal solar tax credit save you money?
The credit lowers your federal tax liability. So for easy numbers, if you paid $10,000 on your solar panel system, you can subtract 30% of that from your federal income taxes ($3,000). So, if for example you paid $3,000 into your federal taxes, the $3,000 credit that you receive for going solar would drop what you owe to zero.
Combine that with the money that you save by eliminating your electric bill and you can see why so many people are switching to solar. Most of our customers in New England see savings of 30%-50% compared to their average electric bill. So when they go solar, they usually see lower payments right away!
Should you switch to solar power?
There are several benefits to switching to solar power. It can reduce your carbon footprint and help save money on energy bills — and It’s clear that the solar tax credit has a lot of benefits as well. With solar, you can save money on your energy bills, help the environment and help the planet!
You can check your home’s solar potential to see if switching to solar power would save you money on your electric bill. Click the link below to see if solar makes sense for your home.