The federal solar tax credit is great for homeowners and business owners to save money on their solar installation. The credit provides a dollar-for-dollar reduction in your total tax liability and can be used to pay for up to 26% of the cost of a solar system. But how does this tax credit save you money? Let’s take a closer look at this renewable energy incentive and how you can maximize your return.
How Does It Work?
The federal solar tax credit, or Investment Tax Credit (ITC), is an incentive that reduces the cost of installing a new solar system by providing a dollar-for-dollar reduction in your total federal tax liability. If you owe $3,000 in taxes, you can use up to $780 (26%) of this amount towards your installation costs.
The ITC is available for residential and commercial installations, but the amount varies depending on when you installed your system. If you installed your system before 2022, you could receive up to 22% back from the federal government; however, in 2023, that number is at 30%. Additionally, businesses may qualify for an additional 10% bonus depreciation if they installed their systems before 2022.
Maximizing Your Return With ITC
The sooner you install your system, the more money you will save in the long run. You will get more back from the ITC and benefit from years of free energy. Additionally, research ahead of time pays off to know exactly what kind of setup will work best for your home or business before starting any installation process. Considering all these steps upfront can help ensure that when it comes time to file taxes, you can maximize your return and save even more money on top of already discounted prices.
Conclusion
If you’re looking for ways to reduce your energy costs or make renewable investments for the future, then taking advantage of the federal solar tax credit could be just what you need. With this incentive, homeowners and businesses alike can reduce their overall cost of installation while also benefiting from years of free energy down the road. Do some research ahead so that when it comes time to file taxes, you can capitalize on this opportunity and save even more money. Need more help understanding the Federal Solar Tax Credit? Our professional team can guide you and save you money by going solar.