One of the biggest mental hurdles towards choosing to go solar is the perceived investment cost. However, incentives such as the Federal Solar Tax Credit can take thousands of dollars off that investment and make solar a savings rather than a cost.
So why should you invest in solar now? Because 2022 is the final year of the 26% Federal Tax Credit. If you don’t invest in your solar energy system in 2022, you will be losing out on thousands of dollars in savings.
The Federal Solar Tax Credit (also know as Investment Tax Credit or ITC) is a percentage credit of the total cost of your solar energy system that you claim on your taxes to reduce the amount owed.
The tax credit is 26% through the end of 2022. This means that if your system is turned on in 2022 you can reduce your federal income taxes by 26% of the cost of your solar investment. This credit also applies to the cost of battery storage systems that store solar energy and keep the lights on if the grid goes down as well as related electrical work or structural work needed for the solar installation.
But there is something you need to know. Unless Congress renews the tax credit through both the House and the Senate, which it has not done at this point, the tax credit will be reduced for 2023 and go away entirely by 2024 for residential systems. With mid-term elections coming up this fall, it is very difficult to predict what congress will be able to get done this year with regards to solar.
Let’s break down exactly what waiting to invest loses you.
If you pay $20,000 for a residential solar energy system, here is how much you would pay for that system with the federal tax credit taken out:
If you go solar in 2022: $20,000 – ($20,000 * 0.26) = $14,800 total cost
If you go solar in 2023: $20,000 – ($20,000 * 0.22) = $15,600 total cost
If you go solar in 2024: $20,000 – ($20,000 * 0.00) = $20,000 total cost
Commercial properties switching to solar will receive the following tax credits:
If you go solar in 2023-2025: $20,000 – ($20,000 * 0.22) = $15,600 total cost
If you go solar in 2026: $20,000 – ($20,000 * 0.10) = $18,000 total cost
It is important to note that this is just the federal tax credit cost reduced from your overall amount. State and local incentives vary, and you should choose a home assessment with a solar company that makes sure you receive all incentives you are eligible for.
Solar energy-systems have a typical pay-back period of seven to nine years and can usually be financed with zero down and for lower payments than your electric bill would be. In other words, you can save money on day one with solar and own your power.
If you want to get a free, no obligation site assessment to understand exactly how much a solar energy system will cost you, and how much it will save you each month on your utility bills, reach out. The solar experts at Valley Solar are happy to answer any questions you have.
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Residential Tax Credit Source: https://programs.dsireusa.org/system/program/detail/1235/residential-renewable-energy-tax-credit
Commercial Tax Credit Source: https://programs.dsireusa.org/system/program/detail/658/business-energy-investment-tax-credit-itc
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