Cost Benefits

A little background: The solar tax credit was established in 2005 with the goal of making solar energy more affordable for Americans by lowering taxes on the purchase and installation of solar panels. The solar investment tax credit (ITC) was extended through 2015, and then Congress adopted the federal spending package for 2016 to 2019, which extended the solar panel tax credit for another year while keeping the 30% deduction for taxpayers.

Another solar tax credit extension was included in a large omnibus spending package voted by Congress, which includes $900 million in coronavirus relief. The home solar tax credit will be 26 percent from 2020 to 2022 under the proposed legislation, before reducing to 22 percent in 2023. Unless Congress decides to extend it, the credit will expire in 2024.

Solar projects in all sectors, including residential, commercial, and industrial, are eligible for the 26 percent tax credit if they begin development between now and 2022. While the tax credit for homeowners is slated to expire at 0% in 2024, a 10% credit will be available for utility and commercial markets beginning in January of that year.

Switching to solar electricity is made simple and affordable for Americans thanks to the federal solar investment tax credit. You can claim it for your solar photovoltaic (PV) system, battery storage, and installation charges when filing your federal income taxes. The percentage difference is determined by whether your system was installed between 2020 and 2024.