During the past few years, there have been a lot of advances in the development of more energy-efficient home technology. One of the biggest developments has been solar power systems. For those who are looking for a way to reduce their utility costs while also helping the environment, solar energy is the way to go. Furthermore, there are also solar panel rebate options that can help homeowners save money on their taxes. This is because the government also wants to help the environment and is incentivizing owners to invest in solar panels. With the Solar Investment Tax Credit (SITC), there are few key points that everyone must keep in mind.
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How Does the Solar Investment Tax Credit Work?
A solar panel rebate usually exists in the form of a federal tax credit. There could be some state tax credits that apply from location to location; however, these differ across the country. Keep in mind that some states, such as Texas, do not offer a statewide solar tax credit. However, the local government and utility companies may provide some incentives.
Throughout 2021, the Solar Investment Tax Credit is going to be equal to 26% of the total cost that homeowners incur while installing a solar energy system. There is no cap on the Solar Investment Tax Credit. This means that if someone spends $20,000 to install a solar energy system, homeowners should expect to get just over $5,000 back in the form of a tax credit.
Solar Tax Credits vs Deductions
Lots of people have questions about tax credits versus tax deductions. A tax deduction is subtracted from someone’s gross taxable income, while a tax credit is deducted from the amount of money that someone pays directly in taxes. In short, a tax credit is better.
Finally, it’s important to note that the Solar Investment Tax Credit is going to change from year to year. While this tax credit is worth 26% in 2021, this will drop to 22% in 2023 and then expire completely in 2024. Businesses will be able to receive a 10% Solar Investment Tax Credit in 2024 and beyond.
Who Receives the Solar Investment Tax Credit?
Anyone who has a home or business and owns the solar energy system on their property can claim the Solar Investment Tax Credit as long as they built the solar energy system in the same year in which they are paying taxes.
Furthermore, the Solar Investment Tax Credit is non-refundable. This means that if the solar energy system yields a larger tax credit than someone owes in taxes, the homeowner pays nothing in taxes that year. The leftover amount can be carried forward to next year.
How Can Homeowners Claim the Solar Investment Tax Credit?
To claim the Solar Investment Tax Credit, there are a few forms that homeowners need to fill out. These include:
Both forms come with helpful instructions that are relatively easy to follow. Once you fill out these forms, homeowners will be ready to claim the Solar Investment Tax Credit.
How Long Do Solar Energy Systems Last?
For those who are thinking about building a solar energy system, they might wonder how long the system is going to last. The good news is that a solar energy system is going to last much longer than most other home utility systems. Many studies have shown that solar panels can last for 25 to 30 years.
To take a closer look at the answer to this question, it’s important to look at the solar panel degradation rate. In short, this is the degradation of individual solar panels per year. In general, solar panels are going to degrade their efficiency levels at a rate of between 0.3 to 0.5% per year. This means that even if users have solar panels that run for 25 years, they are still going to operate at around 88% of their original efficiency rate after this time.
How Much Money Will Solar Panels Save?
Some homeowners would also like to know how much money they are going to save by installing solar panels. The answer is that this depends. Some factors that will play a role include:
- How much power a home uses regularly (pool heaters are known to require a lot of electricity)
- The sun exposure of the home, as homes that receive a lot of sunlight will generate more power through their solar panels
- The possibility of receiving an electricity credit by donating excess solar power back to the city’s power grid
These are just a few of the many factors that will play a role in the amount of money that homeowners can save by installing solar panels.
Trust ONIT for Solar Energy Systems
It’s important for all homeowners to make sure they maximize the size of their solar panel rebate. Those who get the most out of their solar panels have a chance to reduce or eliminate their electricity bills entirely. Anyone with questions about their solar energy system or a general curiosity about a solar panel rebate can trust our experienced team over at ONIT for guidance. We take great pride in helping our customers find the technology and resources they need to make their lives easier. Contact us today to learn more about our services!