Whether you believe in global warming or not, renewable energy sources are important to ensuring a sustainable future. In order to encourage homeowners to make the switch, both individual states and the federal government offer substantial tax credits for residential solar energy systems.
First, and foremost, in order for your system to qualify for solar tax credits, it must meet certain standards. Solar water heating property must be certified by SRCC or a comparable entity endorsed by the state where the system is installed. Also, at least half the energy used to heat the dwelling’s water must be from solar. Geothermal systems and fuel cells have their own requirements, as well.
As for the tax incentives, the amount of the rebate subsidy varies by program, but some are generous enough to cover up to 30% of your solar system cost. However, these programs are designed to reward early adopters of solar power and energy efficiency, so the rebate amount per home continues to drop as the allotted funds are consumed.
For example, Arizona currently offers a 25% personal tax credit for residential solar and wind energy systems. Though, like most incentives, it is not without limitations; there are specific system requirements in order to qualify. Minimum requirements In Arizona maintain that your system must be new and carry a 2-year warranty. There are a multitude of additional incentives, as well. Many states offer personal tax credits, property tax credits, sales tax incentives, and various rebate programs. You may be able to save even more money than you expected, so make sure you check out your state, and sometimes municipality, specific guidelines before committing to installation.
The federal government allows you to deduct 30% of your solar system costs off your federal taxes through an investment tax credit (ITC). Conveniently, if you do not expect to owe taxes this year, you can roll over your credit to the following year.
The federal government’s residential renewable energy tax credit establishes limits on the amount of credit you can receive for some systems, however, many of these ceilings were removed after 2008 with the Energy Improvement and Extension Act. For solar-electric and solar water-heating property, there are no limits for systems installed after 2008. Other renewable energy systems may have a per kW maximum credit, but most systems installed after 2008 no longer have maximum credit limits, which allows homeowners to install a large enough system without sacrificing quality for affordability.
So, if you’re interested in switching to solar, or simply want to explore alternative energy sources, we encourage you to contact us with any questions you may have using the form at the bottom of the page.