Monday evening brought good news to the solar energy industry and to consumers interested in solar, with Congress voting to extend the solar investment tax credit (ITC) for two years as part of a $1.4 trillion federal spending package. That means that the ITC, which was scheduled to drop to 22 percent in 2021, will instead remain at 26 percent for 2021 and 2022, and then drop to 22 percent in 2023. The credit for residential solar projects will be eliminated in 2024. President Donald Trump is expected to sign the bill into law.
Commercial and utility projects will follow a similar stepdown schedule, with the only difference being that the value of its tax credit will be set at a permanent 10 percent beginning in 2024.
What does the federal solar tax credit do?
The federal solar tax credit currently allows consumers to deduct up to 26 percent of the cost of adding a solar panel system to their home from their federal taxes. So for every $10,000 that a customer spends on solar, they can deduct up to $2,600. So if you purchased a $30,000 system, consumers could deduct up to $7,800. That could make the price of solar much more affordable for some, provided they have the taxable income that allows them to take the credit.
“We are heartened to see Congress step up to provide Americans with some relief after our country has been mired in a public health and economic disaster,” said Abigail Ross Hopper, president and CEO of SEIA. “This pandemic has taken an immeasurable toll on American families, and our deepest sympathies are with those who have lost loved ones and those who are suffering economically because of the ongoing crisis. Over the next few years, we have an opportunity to build a stronger, more reliable, and more equitable American energy economy, and the action Congress is taking today is a helpful down payment.”
How the federal solar tax credit has helped the solar industry
The solar tax credit has been a massive success for the solar industry. Since it was enacted in 2006, the U.S. solar industry has grown more than 10,000 percent, according to the Solar Energy Industries Association. That growth has resulted in hundreds of thousands of jobs and billions of dollars of investment in the U.S. economy.
All of those numbers show the power and value of solar. As concerns over climate change rise and consumers seek alternatives to grid energy primarily generated through the burning of fossil fuels, solar energy can be that clean energy solution that customers seek. Solar panels do not produce any carbon emissions and typically have warranties of 25 years or more, making them a great and reliable source of energy for the long haul. Last we checked, the sun shines every day, and solar still works even when cloudy.
POWERHOME SOLAR would love to work with you to install your solar system. Call us today at 800-POWER-90 to see if solar is right for you.