Are you interested in solar power for your home, but the installation cost is holding you back?
While installation costs reduced over the past decade due to the increasing popularity of solar-powered homes, it is a large investment.
The federal government, utilities, and state and local governments have caught on. To incentivize homeowners to take the solar leap, they offer hefty solar tax credits. These credits can save 30-50% off the price of solar! Below we’ll continue to explain all the details on the six tax credits.
1. Investment Tax Credit (ITC)
This is a federal solar power incentive. It is the largest incentive. Let us tell you why go solar.
The federal ITC returns 26-50% of your solar installation cost in taxes. It’s like the returns you get with charitable donations. This type of credit reduces what you owe in taxes.
For some, it even returns as a solar rebate, making this one of the best solar tax credits. And since it is at the federal level, everybody is eligible.
2. State and Local Tax Credits
In most states, there are additional solar tax credits. The actual offerings will vary, but most of them mirror the federal ITC for your state taxes. California houses the SGIP, Self-Generation Incentive Program.
Massachusetts has the SMART Incentive Program. Both of these programs pay home and business owners per kilowatt, which adds up. In Maryland, the rebates can be up to $5,000 for residents and up to $150,000 for businesses.
3. Cash Rebates
Certain states, municipalities, and utilities provide immediate cash energy rebates. Act fast.
These rebates have limited funding and end once a certain goal of solar installation succeeds in the area. A cash rebate can reduce your cost by an additional 20%.
4. Solar Energy Renewable Certificates (SRECs)
SRECs measure the amount of energy generated from your solar-powered homes. Your SREC represents the environmental benefits of your solar installation. You can sell your SREC to boost income.
5. Performance-Based Incentives
Also known as PBIs, these incentives pay a per kilowatt-hour credit for the electricity produced by your solar system. The main difference between a PBI and SREC is the latter doesn’t need to be sold. Incentive rates are created upon installation.
6. Modified Accelerate Cost Recovery System (MACRS)
The MACRS is a business incentive. This incentive is available at both the federal and state tax levels. It is a form of asset depreciation.
In other words, you can cut the taxes you owe each year by annual deductions. Since the value of the solar panels goes down the more they are used. Businesses can save 25% or more of what they spent on solar through the MACRS.
Investing in Solar Powered Homes and Businesses
Solar power might seem like a tough pill to swallow. The costs are steep, but hopefully, this article has made you realize the insane amount of money you can actually save in the long run with a solar-powered home or business!
Not to mention the money saved on your electric bill! For more homeowner hacks, continue reading our blog!