Going solar has never been more affordable and accessible, thanks to various tax credits offered by the government. These incentives are designed to make it easier for homeowners to switch to renewable energy sources and reduce their carbon footprint. If you’re thinking of going solar, here’s what you need to know about solar and residential energy tax credits.
To be eligible for solar tax credits, you must own the solar energy system and have it installed on your primary residence. Renters are not eligible for the tax credit, but landlords who install solar panels on their rental properties can take advantage of the credit. Additionally, solar panels must be used to generate electricity for your home, and the system must be certified by the relevant authorities.
The federal tax credit applies to both the cost of the solar panels and the installation costs. Starting in 2022 You can claim a 22% tax credit on the total cost for residential systems and 10% for commercial systems.
Applying for the Tax Credit
To apply for the solar tax credit, you’ll need to fill out Form 5695 and attach it to your tax return. You can also carry over the tax credit to subsequent years if the total cost of your solar system credits exceeds your tax liability in a given year.
It’s essential to keep all the receipts, invoices, and other documentation related to your solar installation, as you may need to provide this information when applying for the tax credit. You’ll also need the Installation Certificate and the Energy Efficiency Tax Credit form, which can be obtained from your solar installer.
State and Local Incentives
In addition to the federal tax credit, you may be eligible for state and local incentives that can further reduce the cost of your solar installation. For example, some states offer rebates or grants for solar installations, while others offer property tax exemptions or sales tax exemptions.
To find out what incentives are available in your state, visit the Database of State Incentives for Renewables and Efficiency (DSIRE) website. This website provides a comprehensive list of state and local incentives for renewable energy, including solar energy.
Going solar has never been easier, and with various tax credits and incentives available, it’s a smart investment for homeowners. By switching to renewable energy sources, you can reduce your carbon footprint, save money on your energy bills, and help protect the environment for future generations. So, why wait? Start your solar journey today and take advantage of these exciting opportunities.”