The federal government enacted the Energy Policy Act in 2005, when business and residential consumers began receiving a 30% tax credit for solar energy system installations. Since last year, the tax credit has dropped a bit but is still sizable and worth considering:
|2017-2019||30% tax credit||30% tax credit||30% tax credit|
|2020||26% tax credit||26% tax credit||26% tax credit|
|2021||22% tax credit||22% tax credit||22% tax credit|
|After 2021||10% tax credit||10% tax credit||None|
What does that mean in real numbers? Let’s just suppose your solar energy system costs $10,000. Your tax break would reduce the cost by $2,600, to $7,400.
Here’s another way to look at it: when we shop retail, 25% markdowns generally catch our eye, but with California sales tax rates as high as 10% we won’t necessarily give that sale the credit it deserves (pun intended). With solar energy credits, you get all 26% off because it comes from the IRS via the Residential Renewable Energy Tax Credit.
How to Get Solar Tax Credits for 2020
The Renewable Energy Credit is, as its name implies, a credit, not a deduction. That means the final amount of taxes you would pay after deductions takes a pleasurable hit. Depending on the system you get, your tax credit could be more than the taxes you owe, in which case you could carry the remainder of the tax credit over to your 2021 taxes. According to Consumer Reports* not all solar installations or expenses are eligible for the tax credit, but when you see the requirements it’s hard to not get the credit.
The sunniness of the Bay Area lends itself to solar power, and Property Assessed Clean Energy (PACE) programs can help with financing in California. Tax credits are still available this year and next year, although next year’s credit will drop again. Any eligible solar installation finished before December 31, 2020 brings the tax credit with it, so contact us today to find out how we can help you save money (and get money) from your solar energy system.
Synergy Power Can Help You Save With Solar
Synergy Power is a family-owned and operated solar energy company in Livermore, California. We’re happy to serve families and businesses from Sacramento to San Jose, Manteca to Monterey. We’re ready to help answer your questions and assist you in reaching your energy savings goals.
Reach out to us to talk about your solar needs:
*Consumer Reports.org: How to get a Solar Tax Credit