Many homeowners are not aware, but the federal tax credit on the installation of a solar energy system just increased in 2023 from 22% to 30%, making now an incredible time to invest in renewable energy for your home.
The Federal Tax Credit for Solar Photovoltaics, also known as the Investment Tax Credit (ITC), increased Jan. 1 when the Inflation Reduction Act passed by Congress went into effect. It expanded the available credit in terms of both the amount and the timeline. Homeowners who install a solar photovoltaic (PV) system between 2022 and 2032 will be eligible for a 30% tax credit. Prior to the legislation, the tax credit had been 22% in 2022 — but the new law retroactively allowed homeowners who installed systems in 2022 to also obtain the new 30% credit if a credit had not already been claimed.
Why This Is a Big Deal
One reason this is significant is because tax credits are a much more advantageous form of tax relief than tax deductions. A tax credit directly reduces the amount of tax you owe on a dollar-for-dollar basis, while a deduction only reduces your taxable income.
Tax credits, like the ITC, offer a specific dollar amount or percentage of eligible expenses, providing homeowners with a clear understanding of the financial benefit they will receive. And the fact that the credit is now 8% higher means you will directly save an additional 8% on the purchase and installation of a new solar energy system.
Get Your Energy Independence
By taking advantage of the ITC, homeowners can experience savings of more than $7,500 for an average system. Additionally, going solar can lead to average savings of $9,000 on electricity bills throughout the system’s lifespan.
Because the ITC lowers the initial investment, it accelerates the payback period and makes solar energy accessible to a wider range of individuals, promoting renewable energy adoption.
How To Take Advantage
You can read up on eligibility requirements for the ITC and work out the numbers by yourself if you wish. But if you receive a free estimate from Solora Solar for a solar installation on your property, these savings will automatically be calculated for you, along with other incentives like the sales tax exemption on solar energy systems currently available in Washington state.
Solora Solar will make sure you have the appropriate documentation to claim your credit and samples of federal and state tax forms to help guide you on how to file. This is provided in addition to handling all other paperwork associated with your solar installation, including permits, inspections and warranties for your new equipment.
If you would like to explore your savings and begin enjoying the benefits of solar, get started by contacting us today.