Why is the Government Giving a Tax Credit for Going Solar?
by Cody McGowan, on Sep 22, 2020 1:34:00 PM
Here’s Why Homeowners Receive Tax Incentives For Installing A Solar Energy System.
There are many benefits for homeowners who decide to switch to solar energy for their homes. Not only does solar power help the environment and reduce carbon footprints, it also lowers energy costs and improves property values.
Another great perk is the federal investment tax credit (ITC), which allows solar energy users to deduct 26 percent of installation costs for solar energy systems from their federal taxes. As a solar energy user, the tax credit would be a dollar-for-dollar reduction in the income taxes you file. Illinois also offers a tax break for homeowners who add solar panels to their homes; an increase in home value due to solar panels will be ignored in property tax evaluations. The Illinois Shines program also grants Solar Renewable Energy Credits for every megawatt hour of electricity your home’s solar system produces.
If you're wondering why the government would offer tax credits and incentives for going solar, here are the reasons.
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Increases Energy Independence and Reduces Fossil Fuels
Solar energy increases our country’s energy independence — both on the regional and national levels. Using more domestic solar power will lead to less reliance on foreign energy sources, such as imported carbon-based fossil fuels. Why is it important to be energy dependent? There’s instability with global energy markets that results in price fluctuations. These price changes deeply affect our country’s economy. Expanding our solar energy usage means we will be less impacted by these varying price fluctuations.
To reduce our reliance on fossil fuels, and instead support the growth of sustainable and energy-efficient technologies, the U.S. passed the Energy Policy Act of 2005, which established the federal ITC.
Diversifies Our Grid
As a country, investing in cleaner technologies allows us to better diversify our grid and improve efficiencies within those grids. Having a mix of different fuel sources adds diversity to our grid and reduces our carbon footprint. While some might think it makes sense for everyone to automatically switch to carbon-free renewables such as solar, renewables alone can’t meet the world’s current energy needs. Using multiple energy solutions is the right step on the path towards transitioning fully to carbon-free renewables.
In addition, more solar users means more solar energy can generate over a wider area instead of one centralized location. This reduces the number of investments communities need to make and grants they would need to receive from the federal government to grow infrastructure. Increased solar usage across a fuller area allows communities to use more localized equipment and save more money overall. The result would be a more resilient grid and better service for people within each market.
Another significant reason the U.S. incentivizes solar usage is job creation. In Illinois, the Clean Energy Jobs Act is currently being proposed and would expand equitable access to quality jobs, economic opportunities, and wealth creation. The Act strives to build 12 to 15 clean energy workforce hubs across the state for job training, apprenticeship programs, stipends, and career counseling.
According to The Solar Foundation, the solar industry employs nearly 250,000 workers in the U.S., and solar jobs have increased by 167% over the last decade. From 2014 to 2019, solar employment grew 44% — a rate that was five times faster than job growth overall in the U.S. economy.
If you’d like more information about receiving a tax credit for solar usage, contact our team at Summit Solar. You can email us or give us a call. We’ll answer any question you have!