Planning on switching to solar energy? Take advantage of tax breaks and rebates available in your state!
Last updated on 12/17/19, by Esmeralda Torres | Written by Nina Goodey
Wondering which government financial incentives you’ll qualify for if you decide to go solar? Take a look below to see which tax breaks and bonuses you’ll get from the federal and state governments.
Federal Solar Tax Credit/Investment Tax Credit:
In 2005, the Energy Policy Act was enacted, giving people a 30% tax credit from the installation of their solar systems.This means that for the total cost of your solar project, you’ll get 30% back as a credit towards your taxes. For example, say you paid $10,000 for the whole installation - you’ll have $3,000 taken off your federal taxes. This means that if you owe $5000 on your taxes, that $3000 will be taken out of that cost, and therefore you’ll only be paying $2000 instead. That’s a pretty sweet deal, right? (It’s one of the reasons we recommend buying instead of leasing, as the legal owner of the panels gets the tax credit.)
Want to take the government up on that offer? Unfortunately, the tax credit will only stay at 30% this year, because next year in 2020 it starts dropping off. If you want to take advantage of the credit, build fast. The credit will only be 26% in 2020, 22% in 2021, and 0% in 2022 (10% for commercial projects).
To claim the credit, just make sure it’s on your annual federal tax refund. The form you’ll need to complete is the IRS 5695. You’ll get the credit amount for the year you completed the construction, so panels that you bought in 2020 but installed on your house on 2021 will only get you a 22% tax credit.
Most states offer a mountain of incentives, benefits, and rebates if you choose renewable energy, and there’s too many to fit them all here. Instead, check out the link below for resources to find out which perks you qualify for in your state or county.
The North Carolina Clean Energy Technology Center has a useful compilation of incentives. Click here to see their website and an interactive map that shows you what’s available in your state.