Solar Panels And The Federal Tax Credit For 2020
There are many reasons why installing a solar panel for your home and/or your business may be one of the smartest investments you can make these days. Solar energy is clean and renewable and it also helps you save money on your electric bills.
Despite the financial and environmental benefits that solar panels provide, many people still point to the costs of installing these systems as their biggest hurdle.
However, the price of solar has declined by more than over 70% since 2006 and will drop further the more people install them. In addition, industry insiders estimate that every time the production of panels doubles, solar prices can potentially fall as far as 20%. For information on solar panels in Albuquerque, visit our Solar Solutions Albuquerque page here https://www.solarsolutions-texas.com/solar-panels-albuquerque/.
Solar Energy is going mainstream
It’s becoming increasingly evident that the price of solar will come close to, and in some cases, will even match the price of traditional energy in many US states. The US Government is certainly doing their part in helping solar become mainstream for both homes and businesses.
The Federal Solar Tax Incentive for 2020, also known as the investment tax credit (ITC), allows both home and business owners to deduct up to 26% of the cost to install a solar energy system from their federal taxes.
We’ll take a look at some of the details regarding this bill so you can take advantage of the credit before the rate is lowered next year.
What is the Federal Solar Tax Credit for 2020?
In 2020 you can get a tax credit of 26% which can mean thousands of dollars in savings when you switch to solar. For example, if your residential solar panel costs $15,000 to install, you’re eligible to claim a credit on your 2020 tax return of $3,900.
It’s important to note, however, that the federal ITC rate is set to be lowered in 2021 to 22% and will eventually be eliminated by 2022. In other words, there’s no better time than now to give your home or business an upgrade with a solar energy system.
The federal ITC of 26% applies to both homes and businesses and currently has no cap on its value. Here are some additional details for how this credit affects both homes and businesses.
What kind of expenses are covered under the ITC?
The process of installing a solar panel for your home or business may seem overwhelmingly difficult and technical. However, that’s why you should also hire a team of solar panel installation professionals who can ensure that your system runs safely and efficiently, and can provide support and guidance when you need it.
That being said, it is important to know what kind of expenses are eligible to claim for credit on your federal tax return for 2020. Here are some of the most common expenses covered under the ITC:
- Solar PV panels or cells used to power your ceiling fan.
- Cost of labor for onsite inspection and preparation, developer fees, assembly and even permitting fees.
- Balancing of the system equipment including the wiring, inverters, and the actual mounting of the equipment.
- You can also include the sales taxes on eligible expenses.
Get in touch with your local solar energy professionals, Solar Solutions, today to start enjoying the benefits of solar energy and how you can save money under the federal ITC.