How Does the Federal Solar Tax Credit Work?
Solar adoption is skyrocketing, thanks to plummeting solar panel prices that enable homeowners to save money. For the first time, homeowners can control their electricity costs by going solar instead of being at the mercy of ever-rising utility rates. And through the end of 2019, going solar is extra appealing thanks to the federal Residential Renewable Energy Tax Credit, which can be worth up to 30% of the total cost of your solar installation! Under current law, the 30% tax incentive will remain in effect through December 31, 2019. After that, it will drop down to 26% for 2020, 22% for 2021, and to zero after 2023
It’s simple to see if your home qualifies for these credits! Just request a No Cost No Obligation Consultation.
A tax credit is a reduction in the amount of taxes you owe. The typical homeowner that goes solar with Mosaic pays about $30,000 for a 7 kilowatt solar installation. So, in this example, the 30% federal tax credit could reduce your taxes by $9,000 – quite a nice bonus! Taking advantage of this credit is easy as A-B-C, if you know the eligibility requirements and how to claim it.
KEEP IN MIND: We’re solar people, not tax people, so we don’t give tax advice. Anything you read on this page is merely an example and may not be appropriate for your unique financial situation. Not everyone will be eligible, so please consult a tax professional before filing your tax credit.
Tax Credit Eligibility
To qualify for the 30% federal Residential Renewable Energy Tax Credit, you must meet all of the following requirements:
- Your system must be installed by December 31, 2019.
- You must own your home (renters are excluded, unfortunately).
- You must pay enough taxes to the Federal Government to qualify for the 30% tax credit.
- You must own your solar panels.
This last point isn’t quite as obvious as it might seem, since many homeowners today actually lease their solar systems through third party companies. While leasing may make sense in some situations, it means that the leasing company gets to claim the tax credit instead of you! By contrast, homeowners that buy their panels outright or finance them with a loan do get to claim the tax credit.