2020: Final Year to Claim 26% Federal Solar Tax Credit
Solar energy is attractive for several reasons. It helps business and homeowners generate their own electricity at a much lower cost, and is an environmentally-friendly alternative source of energy.
The state of NJ offers several attractive tax incentives on solar systems, so residents can install their own solar panels, and the government will essentially pay for the entire system.
In this blog post, we look at one type of federal tax credit that’s available to anyone who owns their solar system: the 26% federal solar tax credit.
Firstly, what is tax credit?
Tax credit is a dollar-for-dollar reduction in the amount of income tax you would otherwise owe. For example, claiming a $1,000 federal tax credit reduces your federal income taxes due by $1,000.
What is the federal solar tax credit?
- The federal residential solar energy credit is a tax credit that can be claimed on federal income taxes for a percentage of the cost of a solar photovoltaic (PV) system.
- The system must be installed during the tax year and generate electricity for a home located in the United States.
- A solar PV system must be installed before December 31, 2020, to claim a 26% credit. This tax credit will decrease to 22% for systems installed in 2021, and it will expire starting in 2022, unless Congress renews it. Talk to the Solar Experts today, to learn if you can take advantage of this higher tax credit in 2020.
- There is no maximum amount that can be claimed.
Am I eligible to claim the 26% federal solar tax credit?
You are eligible for this tax credit if you meet the following criteria:
- Your solar PV system was installed between January 1 and December 31, 2020.
- The solar PV system is located at your primary or secondary residence in the United States, or for an off-site community solar project, if the electricity generated is credited against, and does not exceed, your home’s electricity consumption.
- You own, rather than lease the solar PV system (meaning that you purchased it with cash or through financing but you are not leasing or purchasing electricity generated by a system you do not own).
- The solar PV system is new or being used for the first time. The credit can only be claimed on the “original installation” of the solar equipment.
At the Solar Experts, we are passionate about helping our customers switch to renewable energy, and we are experienced in guiding customers through the process of claiming all the available NJ tax incentives, so that your system actually saves you money every month.
If you’d like to discuss the options available to you in a no-obligation phone consultation, please give us a call on 732-865-1998.