Looking for a good reason to make the switch to solar? If the lower monthly utility bills and decreased carbon footprint weren’t big enough reasons, you may also be able to take advantage of a number of the financial incentives available, including state incentives specific to Calfornia. Of these incentives, perhaps none is bigger than the federal tax credit. Let’s take a closer look at how this incentive works so you can see how much you might save from it!
How Much Can You Claim on Your Solar Installation Costs?
Let’s face it, installing a solar panel system without any sort of financial assistance can be expensive; however, many of the incentives that are available today allow you to make the switch at a price you can afford. The federal tax credit is one of these incentives, and thankfully its existence was not touched as a result of the recently-passed tax reform laws.
The federal tax credit, also known as the Federal Investment Tax Credit, or ITC, allows you to claim up to 30 percent of the total cost you pay to install solar panels from your federal tax burden for the year. This allows you to make the investment in your home or business and know that the rewards will come back to you later in the form of both reduced energy costs and a tremendously-reduced tax burden.
How Does the Federal Tax Credit Actually Work?
Let’s look at a few examples. Let’s say you installed a solar panel system for $10,000 in 2017 and have a federal tax burden of $5,000. When you apply for this credit, you can claim up to 30 percent of the cost of your panels as a credit, or up to $3,000 in this instance. That reduces your tax burden to just $2,000!
Furthermore, if the panel system has a price tag of $20,000, you can claim up to $6,000 of the cost as a tax credit. Because it eliminates your entire $5,000 burden, you would be left with an extra $1,000, which you may be able to roll over into the following year’s tax credit. As a result, you’ll likely get a significant refund check back once you’ve filed your return.
Is There a Limit to How Much I Can Claim for My Solar Panel Installation?
This credit has no limit, meaning you can claim up to 30 percent of the cost of any qualifying solar panel system purchase, no matter how much it costs. To make matters even better, it’s available through the end of 2019, so it will be available in full for at least the next two full years.To learn more about the ITC or any of the other great incentives we can help you take advantage of, speak with the experts at Sunpower® by Sea Bright Solar today! Call (909) 480-3783 for a consultation.