It’s no secret that going solar can save you money on energy bills, but did you know it can also save you money on taxes? At both the state and federal levels, there are tax exemptions and credits that can help you save big after switching to solar power.
It’s important to note the tax credits exclude leased or third party owned solar systems.
Solar Investment Tax Credit (ITC)
The ITC allows you to deduct 30 percent of the cost of installing a solar system from your federal taxes. This 30 percent credit will only be available through 2019. In 2020, the credit will fall to 26 percent. It falls again to 22 percent in 2021. From 2023 and beyond, the tax credit will no longer be available to residents, and it will become a permanent 10 percent for commercial and utility projects. You can claim this tax credit once construction begins. However, this credit isn’t redeemable by everyone. The ITC is only available to those who buy their solar panels outright, either with cash or a solar loan.
Want more good news? Earlier this month, the Internal Revenue Service (IRS) decided that the 30 percent tax credit also applies to residential battery storage. The batteries need to be charged exclusively from solar for at least five years to qualify for the tax credit.
Residential Solar Energy Credit
With this credit, you can get reimbursed for 25 percent of the cost of your solar panels. You can only get reimbursed up to $1,000, and it can only be applied in the year you install the panels. The Residential Solar Energy Credit is available to residents with solar panels who are not dependents of other residents.
Solar Equipment Sales Tax Exemption
In the state of Arizona, you are exempt from paying 100 percent of the sales tax on any solar panels you buy. You are also exempt from the sales tax accumulated from the installation of those solar panels. There is no maximum rebate you can receive. This tax exemption is available commercially and residentially. It is also available to installers and contractors.
Energy Equipment Property Tax Exemption
When you add solar panels to a house, it appreciates in value. With the Energy Equipment Property Tax Exemption, you are not required to pay any additional property taxes on the value you add to your home buy installing solar devices. It’s important to note, however, that even though the state does not charge property tax, the county may subject the system to property taxes. Also remember the insurance on your property may rise a very modest amount to cover any damage or replacement costs.
When you're filing your taxes, don’t forget to include these credits and exemptions! Save money while you help save the planet. SunHarvest Solar can help you find the best solar options for your home, and can answer any questions about these exciting credits and exemptions.