Switching to solar energy is a smart move for both your wallet and the environment. One of the best ways to save money on your panels is the Federal Solar Investment Tax Credit, or ITC! In this article, we’ll give you our top tips for using the ITC to save money when you switch to solar.
If you’re not sold on solar panels yet, check out True Power’s options for residential and commercial solar installations. With these incentives and rebates and True Power’s affordable pricing and expert team, making the switch is easy!
What is the Federal Solar Investment Tax Credit (ITC)?
The Federal Solar Investment Tax Credit, or the ITC, lets you deduct a portion of your solar installation costs from your federal taxes. As of 2024, the ITC offers a 30% credit for systems installed on residential properties– so if your solar installation costs $20,000, you can claim a $6,000 credit on your federal taxes. (US Department of Energy)
How Does the ITC Work?
- Eligibility: First, make sure you qualify for the program. The ITC is available to all U.S. homeowners who purchase and install a new solar energy system on their primary or secondary residence. Systems installed before December 31, 2032, are eligible for the 30% credit.
- Claiming the Credit: To claim the ITC, you need to complete IRS Form 5695 when filing their federal tax return. This form calculates the credit amount and is then transferred to Schedule 3 on Form 1040.
- Roll Over Benefits: If the credit you get is more than your tax liability for the year, the remaining credit can be rolled over to future tax years!
Financial Impact
Here’s an example of how the ITC can impact the cost of your solar system:
- Total System Cost: $20,000
- ITC (30%): $6,000
- Net Cost A big reduction in the upfront cost makes solar energy much more accessible and speeds up the return on your investment. The savings continue as you generate your own electricity and reduce or eliminate your utility bills.
Additional Benefits
- Increased Home Value: Solar installations can increase the resale value of your home. Studies have shown homes with solar panels sell faster and at higher prices than those without. (This Old House)
- Environmental Impact: By switching to solar, you’re reducing your carbon footprint, decreasing greenhouse gas emissions, and contributing to a cleaner, more sustainable environment.
- Energy Independence: Generating your own electricity protects you from rising utility rates and provides a reliable power source, even during grid outages.
How to Get Started
- Ask a Solar Provider: Contact a reputable solar installation company to discuss your options for solar panels and battery storage. True Solar is a great option– we’re a reliable and local business that’s committed to helping you make the switch to solar. Give us a call at (480)-535-4821 today!
- Install Your System: Once you decide to move forward, the solar provider will handle the installation, so you can comply with all regulations.
- File for the ITC: Collect the necessary documentation from your installer and complete IRS Form 5695 when filing your federal taxes. (IRS)
By leveraging the Federal Solar Investment Tax Credit, you can massively reduce the cost of your solar installation and enjoy long-term savings on your energy bills. It’s a win-win situation for both your finances and the environment. Don’t miss out on this valuable incentive—start your solar journey today and reap the benefits for years to come.
If you want more information about the ITC and how to claim it, make sure to check out the U.S. Department of Energy’s Solar Energy Technologies Office or consult with a certified tax professional. And if you’re ready to take the first step towards solar, True Power Solar has got you covered. Call us at (480)-535-4821 for more information!