In 2006, the US decided that putting an emphasis on solar power was a priority. The government created the ITC, or the solar Investment Tax Credit. It was the government’s way of indirectly subsidizing the solar industry and giving it the push it needed to become the world-class player it is now. Actually, since the ITC came into effect, there’s been a 10,000% increase in growth for the solar industry. It’s created hundreds of thousands of jobs and invested billions of dollars into the US economy on a local level as most people choose to have a local solar panel installation company design and install their solar panel system. The tax credit was allowed an extension for a few years and that’s translated to creating a certain stability for an industry that grew rather suddenly in what would otherwise be an unsustainable fashion.
The ITC has been an all around good thing, but next year in 2020, the tax credit will start decreasing.
What Did The ITC Provide?
The ITC principally proves a 30% tax credit for any solar panel installation in both residential and commercial properties. Interestingly, the commercial credit can apply to both customer commercial solar systems and even huge utility farms. Most notably though, as we mentioned before, the ITC has created stability in a fast growing market. That makes it easy for companies that are just getting started to make real, defined plans based on market certainties and long-term development investments. The ITC has managed to do everything it’s promised in bolstering a needed industry, driving competition and causing the creme to rise to the top and empowering technological innovation in a product line that sorely needed it when the ITC first started.
The government subsidy for this has obviously lowered the cost consumers have to pay for the product, making solar more affordable across the board, which can only be a good thing. In short, the ITC has been the most powerful legislation made on behalf of the clean energy drive.
How Does The ITC Work?
For the residential ITC, you can apply for a credit to be added to your personal income taxes the year you get the solar panel installation completed. If you were a business that recently invested in solar panel installation, or you were pondering the idea, you would simply be able to claim the credit toward the businesses finances and use it something like a write-off.
By “tax credit” we mean that it’s a dollar-for-dollar replacement of your income taxes that the company or homeowner would have to pay the federal government that year.
How The ITC Benefit Is Decreasing Next Year
At the moment, any solar panel installation completed this year in 2019 will be eligible for the 30% tax credit for both commercial and residential industries. In 2020 it will drop to 26% of a tax credit for both commercial and residential. In 2021, the tax credit will cut down once more to 22% and after that year, the residential tax credit will cease to exist, and the commercial credit will drop to the permanent 10% tax credit.
The best time for a solar panel installation is right now. The 30% tax credit that’s only available until the end of this year is one of the main reasons that solar panel installations are so affordable initially. This makes it much easier for the solar panels to pay off the total cost of the installation and become a means of passive energy usage. Additionally, since solar panels are known to increase the value of your home if you are looking to sell within the next 20 years, you’re essentially getting a tax incentived way to add value to your house. Take advantage of the tax credit now. Reach out to West Coast Solar for your Northern California home today. We’re eager to create a custom solar panel system that makes the most of every second of sunlight your roof gets without sacrificing the look of your roof.
If you have further questions about solar, or you’re looking for more reasons to invest in solar, feel free to check out our Youtube channel that covers everything from testimonials to the benefits of solar and how our solar systems work.