Solar power. Although most homeowners know about this alternative energy source, few realize the exact nature of financial incentives available via federal tax credits. It can be confusing. In fact, the federal tax credit amounts change periodically. We explore the details behind the federal solar tax credit, or solar investment tax credit (ITC), including how to qualify for this exceptional opportunity.
Solar Power: The Future Of Household Energy Consumption
Americans are waking up to the reality that accessing solar energy is easier than ever. In 2013, only about 300,000 homes had solar panels installed. Ten years later, nearly 4,000,000 households utilize solar panels to access energy. Some industry experts estimate that by 2030 (or soon after that), as many as 100,000,000 homes will rely on solar power.
Solar Energy Federal Tax Credit Explained
Under the Residential Clean Energy Credit, the federal tax credit amount equals a specific percentage of the cost of new, qualified clean energy property/equipment for your home.
American Households with Rooftop Solar Panels
30% of the price if placed in service after December 31, 2021, and before January 1, 2033 |
26% of the price if placed in service after December 31, 2032, and before January 1, 2034 |
22% of the price if placed in service after December 31, 2033, and before January 1, 2035 |
If, for example, a homeowner purchases qualified energy-saving, solar-powered equipment and has it installed for a total cost of $25,000 on January 15, 2024, the homeowner will be entitled to a 30% federal tax credit. 30% x $25,000 = $7,500 federal tax credit for 2024.
Concerning the Residential Clean Energy Credit, the cost of new, qualified clean energy property/equipment includes (i) the price of the property/equipment itself and (ii) the qualifying installation/labor expenses.
Who Can Benefit From The Solar Energy Federal Tax Credit?
Homeowners who purchase (not lease) new solar-powered equipment that produces electricity or provides heated water (or buy solar power storage equipment) can claim a federal tax credit under the Residential Clean Energy Credit.
What Types Of Homes Qualify For The Solar Energy Federal Tax Credit?
For American-based homeowners, the Residential Clean Energy Credit requires the residential property to meet specific criteria. The following list incorporates what kinds of residences qualify:
- Condominium
- Cooperative Apartment
- Houseboat
- Manufactured Home
- Mobile Home
- Single-Family Home
Also, take note of the following standards for qualification under the Residential Clean Energy Credit:
Qualifies | Does Not Qualify |
Existing Home As Principal Residence | Located Outside The United States |
New Construction As Principal Residence | Non-Conforming Manufactured Home |
Second Home (Personal Vacation Property) | Rental Property (i.e., Not Your Residence) |
What Systems Are Considered Qualified Clean Energy Property?
The IRS permits a homeowner to benefit from energy-saving improvements, including a credit for the cost of purchasing and installing qualified solar energy systems. The homeowner should add any labor costs properly allocable to the onsite preparation, assembly, or original installation of the system (and for piping or wiring to interconnect such system with the home.)
How Homeowners Benefit From The Solar Energy Federal Tax Credit
Homeowners receive many perks from acquiring a solar energy system:
Implementation Of Solar Solutions By An Expert Roofing Contractor
If you own a home in Sacramento, CA, you owe it to yourself to learn more about solar energy. At Straight Line Construction, we love educating homeowners on the benefits of solar power. We have all the solar products to transform your energy consumption habits and help you do your part to protect the environment. To learn more about any of our roofing services or to schedule an appointment, contact Straight Line Construction today.