Federal Solar Tax Credit
The Federal Solar Tax Credit, as known as the Solar Investment Tax Credit (ITC) allows you to deduct 26% of the cost of installing a solar energy system from your federal taxes in 2020. After 2020 the tax credit drops down to 22%. The tax credit applies to both residential and commercial properties.
The Federal Solar Tax Credit was enacted by the Energy Policy Act of 2005 and was originally set to expire in 2007. However, due the ITC’s popularity and it’s success in transitioning the United States to renewable energy, the expiration date has been extended multiple times.
You can take advantage of the Federal Solar Tax Credit for as long as you own a solar energy system. As long as the tax credit is in effect, homeowners that don’t have enough tax liability to claim the entire credit in one year can also roll over the remaining credits into future years.
To claim the Federal Solar Tax Credit simply tell your accountant that you have recently purchased a solar energy system or if you file your own taxes fill out IRS Form 5695.