How Much Can You Save with the Solar Federal Tax Credit
October 8, 2020
Have You Heard About the Federal Government Solar Rebate?
If you’ve been curious about adding solar panels to your home, you’ve probably heard about the federal solar tax credit, which can help homeowners like you better afford the cost of installation. But 2021 will bring a reduction of the tax credit. So what does that mean for homeowners who still want to harness the energy of the sun with a home solar installation?
Keep reading to find out exactly how that tax credit changes in 2021 and how to get the most financial assistance for your solar panel system installation.
What Is the Solar Tax Credit?
In 2015, Congress approved the 2016 federal spending bill and extended the solar panel tax credit. This federal solar incentive aimed to make solar energy more affordable for American homeowners. Also known as the investment tax credit or ITC, the federal solar tax credit allowed users to deduct 30 percent of the cost of solar panel installation from their federal taxes between 2016 and 2019, saving thousands of dollars per household. That deduction dropped to 26 percent for 2020 and is scheduled to decrease even further to 22 percent in 2021, so the sooner you complete your solar panel installation, the more you’ll save overall.
UPDATE: As of December 2020, the U.S. Congress appears set to extend the step-down schedule by two years in the ombinus spending and covid relief bill. If the current bill becomes law, the tax credit will remain at 26 percent through 2022, decrease to 22 percent in 2023, and then drop to 10 percent for commercial projects and 0 percent for residential projects starting in 2024.
Why the Federal Solar Incentive Is Important for Savings
Solar panels are generally considered a major home improvement project. But most people go solar with no money down upfront, and solar panels generate long term savings by reducing and even eliminating electric bills by generating free electricity. In fact, the average home can save between $20,000 and $40,000 over the lifetime of a solar panel system.
Curious about how solar energy will benefit your home? Here are the top three reasons:
- It drastically reduces or even eliminates your electric bills. A solar panel installation lets you generate free energy. Even if you don’t produce 100 percent of the power you need, your monthly utilities will drastically decrease.
- It helps protect the environment. Going solar is one of the simplest ways to make a significant cut in your carbon footprint. The average solar installation gets rid of three to four tons of carbon emissions annually, which equates to planting 100 new trees.
- It increases your property value. Homes with solar panels have been shown to sell at a higher price than homes without, so if you should ever decide to sell your home, you’ll see a higher property value.
In order to take advantage of the 26 percent tax credit, you’ll need to get started ASAP because it is only available for solar power systems that are installed in 2020, and the process of going solar typically takes a couple of months. In addition to the federal solar tax credit, there may be local rebates available to help reduce the cost of your solar panel installation. For example, Austin Energy offers a solar rebate for solar power, as does CPS Energy in San Antonio. You can see our full list of solar rebates here. Plus, in addition to the federal tax and any local rebates, Texas has a renewable energy property tax exemption—which means that you don’t have to pay extra taxes as a result of the value that your solar panels add. With these incentives, you can start harnessing the power of the abundant Texas sunshine and generating green energy.
Texas Solar Installers You Can Trust
A solar panel installation is a big project. That’s why it’s so important to know that you’re
working with a team that’s got a reliable reputation and the experience to match. As the largest residential solar installer in Texas, we’ve been the go-to for countless homeowners and businesses — even big-name stores such as Whole Foods and Office Depot.
Additionally, we’re serious about all health-related requirements and best practices for keeping our team and your family safe during the COVID-19 pandemic. From consultation to installation, Freedom Solar can bring solar energy to you or your business without ever having to enter your home. If you’re ready to make the switch to a lifetime of green energy, we’re here to help you begin the journey. Contact us today for a virtual consultation!