The initial price of solar installation has declined by around 701% in the last decade, according to data from the SEIA.
Yet, there are many other ways you can save when you install solar power. One of these is the residential solar tax credit for 2021. This is currently at 26%, which means you can deduct over a quarter of the cost of your solar installation from your taxes this year.
That’s great, but what if you’re only considering making the change to solar next year? Do you get a tax credit for switching to solar in 2022?
Find out what’s in store for solar tax credits here.
Residential Solar Tax Credit 2022
The reason there’s a relationship between solar and your taxes is that the United States is firmly committed to reducing our reliance on fossil fuels within the next few years.
As such the federal government extended the 2019 solar tax credit until the end of 2023, although it’s decreased from the original 30%.
For 2022, you’ll still get 26% off your taxes when you install solar, but if you wait until 2023, that saving goes down to 22%. The offer expires in 2024 unless Congress decides otherwise.
The credit applies to the year in which you install your solar energy system. So, if you get connected to solar power in 2023, after you’ve paid your taxes, you can still deduct 22% from 2024’s taxes.
There’s no cap on how much you can claim back, but if you don’t pay enough tax to make the rebate meaningful, the IRS will reject your claim.
Some states, like South Carolina, offer additional tax benefits when you make the switch to solar. Thanks to these incentives, you can save $6,000 or more on your taxes by installing solar.
You can figure out how much your savings will amount to when you get an estimate from a local solar installer.
Property Tax Credits
Depending on where you live, you could also enjoy solar panel installation tax credits on your property taxes. When you install solar, your home’s value increases substantially, meaning you pay higher property taxes.
There are 36 states where this applies, although some have terms and conditions relating to how much you save.
Since local municipalities collect property taxes, the state authorities can only offer them the option to allow these savings. They can’t force them to comply.
So, if your local government doesn’t allow this saving, you must approach the powers that be and campaign for it.
Save More Than Money With Solar
Now you know the answer to your questions about, ‘what is the tax credit for solar?’, plus all the other ways to save with sustainable energy, there’s nothing to stop you from going ahead.
If the residential solar tax credit alone isn’t enough to motivate you, remember, installing solar energy means you’re making a long-term investment in the future of our mankind. Sustainable energy is our best defense against global warming, pollution, and certain extinction.
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