Over the past nine years, the trend has been for 33% of all solar photovoltaic (PV) capacity in the United States to be added in December, according to the U.S. Energy Information Administration. In 2019, many homeowners and business owners alike most likely will contribute to the end-of-the-year-switch-to-solar trend. However, unlike previous years, 2019 is the last year to receive the 30 percent solar tax credit, which is why waiting until December may not be the smartest choice.
What’s the solar tax credit?
The federal solar tax credit, also known as the investment tax credit (ITC), allows people to deduct 30% of the cost of installing a solar system from their federal taxes. The ITC applies for commercial and residential solar systems.
Why is 2019 a final year for solar?
The original ITC was set to expire at the end of 2007. Luckily, for many homeowners, a series of extensions pushed the expiration date to 2016, then Congress opted to add five more years to that timeline, with the amount of the credit changing at the end of this year. Here is a breakdown for the sunsetting of the credit.
From 2016 to 2019 – The tax credit remains at 30% of the cost of the system.
By 2020 – The tax credit goes down to 26% of the cost of the system.
By 2021 – The tax credit goes down to 22% of the cost of the system.
By 2022 and onwards – The tax credit goes down to 10 percent of the cost of the system for businesses, while homeowners will have no credit at all.
Keep in mind, that under the latest legislation, homeowners and business owners are allowed to claim the tax credit as long as construction of the system is complete. Meaning that if your system is completed in 2020, you won’t be eligible for the 30% tax credit anymore, as your system will fall under the 2020 percentage.
Why the time to switch is now?
While switching to solar is a rather quick process, many steps must be completed before you can turn on your solar system. Between paperwork, permits, financials, and every other step in between, switching to solar takes time.
The timing for switching to solar energy has never been better. Don’t wait until the end of the year to choose solar — you don’t want to be leaving money on the table. Contact POWERHOME Solar today and get the process started.