A Homeowner's Guide to the New Solar Tax Credit Extension
March 11 2021
Everybody’s talking about the latest solar tax credit extension. If you’re familiar with the federal solar tax credit, you know that the news is a huge financial relief for homeowners who want to install a solar system.
When the tax was first introduced, it was set to scale back after 2020, and expire completely for residential solar in 2022.
While 2020 has been a difficult year for all of us, there is at least one good thing to come from the chaos. The 2021 solar tax credit has been extended, offering solar savings for another two years at least.
Learn more about the solar tax credit extension and what it means for you as a homeowner. Get the best deal on a solar installation in your area and find out how to take advantage of the solar panel tax credit here.
What Is the Federal Solar Tax Credit?
If you don’t already know, the federal solar tax credit, or Investment Tax Credit (ITC), is a solar tax incentive from the government. The federal ITC was originally created to make solar more affordable in its early years when prices were high. It was set to phase out as solar panels grew in popularity and decreased in price.
Originally, the solar panel tax credit was scheduled to drop from 26% to 22% in 2021. However, Congress recently passed an extensive package of relief and support on many energy and environmental fronts. As a result, the credit will continue at 26% for an additional two years.
This was the original plan for the federal ITC:
Here is the updated plan, thanks to the solar tax credit extension:
The 2021 solar tax credit continues to cover 26% of system costs, which is huge. That cuts almost $4,000 off of a $15,000 system.
Is it the Right Time to Buy?
The coronavirus has certainly caused many Americans to tighten up their finances. With so many uncertainties, it can be tough to know when to spend and when to save.
When it comes to residential solar, the time to buy is now. Solar is becoming more popular in America, which is why prices have been dropping steadily since 2010. In fact, the cost of solar panels has dropped almost 90% over the past decade.
On top of that, homeowners have the opportunity to take advantage of thousands of dollars of additional savings thanks to the solar ITC extension. The solar panel tax credit is an easy way to cut initial solar costs.
Solar panels are a great long-term investment. Kick-off your savings while the prices are low. The solar tax credit extension is great, but it won’t last forever. Purchase solar panels this year to take advantage of the 2021 solar tax credit.
Making the Switch
If you’re ready to go green and want to cash in the savings that the solar panel tax credit offers, simply complete IRS Form 5695 whenever you file your yearly federal tax return. Any tax professional should be able to help you with this. If you want to file on your own, click here for a detailed guide.
Keep in mind that you’re only eligible for the federal ITC if you own the system. That means if you sign a solar lease or PPA, you will not qualify.
Save money by switching to solar. Take advantage of the solar ITC extension to save even more upfront. Plus, use Greenlife Solar to find the best deal on solar installation. Simply enter some information and we’ll provide you with free quotes from solar installation companies in your area.
