by Kelly Anderson, on Feb 19, 2020 11:21:00 AM
The Federal Solar Tax Credit You Need to Know About
It’s that time of year again—tax season. If you’re dreading doing your taxes, there’s something that could make the process a little more painless by this time next year—solar panels. Thanks to the federal solar tax credit, it’s entirely possible to save on your taxes each year just for using solar energy.
Want to learn how your Bloomington, IL home can receive a tax credit and lower monthly bills? Keep reading.
SEE ALSO: 3 Common Myths About Solar Energy (and What Not to Believe)
The Investment Tax Credit
The Investment Tax Credit (ITC) is a program run by the federal government. Currently, you can deduct 26% of the cost of your solar panels from your taxes with no cap on the potential value. The program was created to simplify the process of adding panels to homeowner’s properties so that anyone could help contribute to renewable energy.
Established in 2005, ITC has been popular for those looking to switch to solar. It was initially set to expire in 2007, but the program was extended and now will run through 2021. To qualify, you must own your solar power system and have sufficient tax liability to benefit from ITC. You can claim the credit on your yearly federal tax return.
Why You Need to Act Now
Homeowners can currently receive a tax credit of 26%. In 2021, it will drop to 22%, and then down to 10% in 2022. If you are interested in adding solar to your home, be sure to do it this year before the credit decreases.
Beyond the ITC, you can also save on your monthly energy bills with net metering and Illinois’ SREC program. For each megawatt-hour of electricity that your system produces, you’ll receive one SREC credit. For example, if someone installs an 8kw sized solar system that delivers 10,000 kWh of power annually, they would receive around $12,000. If you would like to save from your panels, consider adding them to your home soon before these benefits run out!
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