23 Mar 2022 Solar Tax Incentives
A tax credit reduces the amount of income tax that you would owe. In this blog, we will be discussing both federal and local/state tax incentives for solar energy systems.
About the Federal Solar Tax Credit:
The federal residential solar energy credit can be claimed on federal income taxes as a percentage of the cost of the system. The Federal Solar Tax Credit, often referred to as the Investment Tax Credit or ITC, began in 2005 and has been extended many times.
All systems installed before 2020 were eligible for a 30% tax credit; in December 2020, Congress passed an extension of the ITC, which provides a 26% tax credit for systems installed in 2020-2022. This tax credit will be lowered in 2023 to 22%, and the tax credit will potentially expire in 2024 unless Congress decides to renew it once again.
About State Solar Tax Credits:
Some states are offering additional tax credits for solar panel system installations. For example, in an article from EcoWatch, the top ten states for solar incentives were mentioned, in which New York, Rhode Island, Iowa, Connecticut, Maryland, New Mexico, Colorado, Massachusetts, New Hampshire, and New Jersey were mentioned as the top ten for additional credits.
For example, the state of New Jersey, where our headquarters are located, offers the following incentives:
Transition Renewable Energy Certificates (TRECs): Residential solar systems can help homeowners earn these certificates, sold back to utility companies.
Property tax exemption: Those who live in New Jersey are exempt from any property tax increases related to their residential solar equipment.
Sales tax exemption: Residents do not have to pay the state’s 6.625% sales tax on solar panels and related installation equipment.
Net metering: New Jersey homeowners can take advantage of net metering, meaning any excess solar power generated by their system can be fed back into the solar grid in exchange for credits.
Look up what additional incentives to the federal tax credit you qualify for in your state once you switch to solar.
Vision Solar is rapidly expanding, and we currently service Florida, Arizona, Pennsylvania, New Jersey, Massachusetts, Connecticut, and Texas. Claim your 26% federal tax credit before 2022 ends and possibly qualify for additional local incentives! Request a free consultation from our expert team: https://visionsolar.com/free-quote/
Disclaimer: This guide provides an overview of the federal investment and local tax credits for those interested in residential solar photovoltaics, or PV. It does not constitute professional tax advice or other professional financial guidance. And it should not be used as the only source of information when making purchasing decisions, investment decisions, tax decisions, or executing other binding agreements.