Dollars for Deeds: The ITC Tax Credit and How It Benefits You
Reusable water bottles, shorter showers, eco-friendly products – these are all the ways you’ve been reducing your eco-footprint, one small deed at a time. It feels good knowing you’re doing your part to contribute to a sustainable planet. But what if we were to tell you that being environmentally friendly could also save you money?
What is the ITC?
The Investment Tax Credit (ITC), more commonly known as the solar tax credit, is a 30 percent federal tax rebate that residential or commercial property owners can claim if they’ve invested in a solar energy system. This dollar-for- dollar reduction in your income taxes is based on the amount of investment you make into solar energy - in other words, the more you invest, the more you save.
First established in 2005 as part of the Energy Policy Act, the ITC credit has been extended a number of times. In 2008, the Emergency Economic Stabilization Act included an eight year extension to the credit, and most recently the Republican Tax Cuts and Jobs Act has preserved the credit for solar proponents planning to commence installation of their new system up until the last day of 2019.
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After 2019, the ITC will begin to steadily decline. Currently, it is projected that the credit will reduce to 26 percent in 2020, and again to 22 percent in 2021 – making this year the ideal time to start looking into purchasing a solar energy system.
What makes you eligible?
To be eligible for the 30 percent ITC:
Your solar system must have commenced construction between January 1, 2006 and December 31, 2019
The system must have been installed on a property within the United States - whether that be commercial or residential
You must own the solar energy system – meaning, you have either purchased it outright or have financed it, and have not leased the equipment
Your solar energy system must be new as the ITC can only be claimed on the original installation of the system
Who is investing in solar power in the U.S.?
The Solar Energy Industries Association (SEIA) predicts that by 2020, over 420,000 Americans will have invested in a solar energy system for their home or business and 100 gigawatts of solar energy will have been cumulatively installed in the same time period. And the solar power industry doesn’t only benefit your pocket change – the SEIA also forecasts a whopping $140 billion of economic activity produced by the industry come 2020.
Have questions about the ITC and other ways a solar energy system could benefit your home or business? Contact one of our solar experts and we’ll walk you through it, step by step.