2020 Federal 26 Percent Tax Credit Extended
December 29, 2020
As 2020 comes to a close, many of us have been anticipating the results of a new COVID relief package — especially those of us who have been financially affected this year. But Congress has been at work on more than just our stimulus checks. The December COVID relief bill is part of an omnibus spending package that also focuses on renewable energy and combating climate change. The investment tax credit (ITC) is a big part of that.
Keep reading to find out how the federal solar tax credit is affected by the federal spending package just passed by Congress, and what it means for the cost of your solar installation.
US Congress Extends the 2020 Federal Solar Tax Credit
Just this week, Congress passed an extensive omnibus spending package that included $900 million in coronavirus relief, in addition to plenty of energy and environmental provisions. This is great news for the health of the environment on many counts, and it’s also good news for homeowners and businesses that want to go solar. That’s because the solar investment tax credit (ITC), which was scheduled to drop from 26% to 22% in 2021, will continue at a rate of 26% for an additional two years.
This means that solar projects in all sectors — including residential, commercial, and industrial — that start construction in 2021 and 2022 will still receive the 26% tax credit. The incentive drops to 22% in 2023, and beginning in 2024 it will decrease to 0% for homeowners. The commercial and utility markets will still benefit from a permanent 10% credit starting in January 2024.
So why is this such a big deal? The ITC has drastically reduced the cost of a solar energy system for countless homeowners and businesses across the US, making it easier to transition to a cleaner, more sustainable form of energy. Congressional leaders and bipartisan mayors alike have been introducing bills in the last few years in an effort to extend the solar ITC, but until now, nothing has made it very far. That’s why this new announcement is a major win for the environment — and for American energy consumers.
In the coming years, we’ll have the opportunity for a cleaner and more equitable American energy economy, thanks to this federal rebate extension that makes it easier to switch to solar power.
Why Solar Power Is a Great Choice
Ready for more good news? While the ITC extension makes going solar more accessible, it’s not the only way you can save on a solar panel installation for your home or business. In addition to the government, cities and utility providers all over the country are offering incentives that can lower the cost of commercial solar panels for your business, including:
- Local rebates and incentives. Depending on where you live, you may be eligible for a rebate that will help make installation more affordable. Many electric utilities offer financial incentives, including distributed generation rebates, for onsite solar PV systems. For example, Austin Energy and CPS Energy in San Antonio both offer a flat $2,500 post-installation rebate for customers who go solar.
- Net metering. This utility billing method allows solar owners to send their unused energy to the grid in exchange for credits on their monthly utility bill. Texas and Colorado both have net metering in place all over the state through local utility companies.
- State tax incentives. Some states offer tax incentives to make owning solar more affordable. Colorado allows an exemption from the state sales tax (or sales and use tax) for the purchase of solar panels which effectively reduces the upfront price of the system. Texas law provides a property tax exemption to ensure that homeowners will not have to pay additional property taxes on the increased value of their home resulting from adding solar panels.
These incentives will vary depending on where you live, but you can check here for more information on what’s available in your area.
Reputable Solar Installers You Can Trust
Thousands of homeowners and businesses have chosen Freedom Solar, the longest serving solar installer in Texas, for our expert installations and our friendly, helpful team — even big-name stores such as Whole Foods and Office Depot!
We’re also serious about our COVID safety measures. Our socially distanced installation process means we can set up your panels without ever needing to come inside your home. From consultation to installation, Freedom Solar can help you go solar while keeping everyone safe. If you’re ready to start generating sustainable energy, we’re here to help you begin the journey. Contact us today for a virtual consultation!