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Many American homeowners care about the environment, and they also wish they could reduce their electric bills. A great way to address both concerns is to get clean, renewable energy from a source that’s available to everyone: the sun. Solar panels installed on a roof or on land can provide energy that would otherwise likely come from fossil fuels, and high-quality panels from a trusted global brand such as LG last for decades. An investment in solar power will pay for itself over time through lower (or even eliminated) electric bills, but some homeowners still hesitate at the up-front cost of installing solar.
The ITC: A Federal Incentive that Helps Defray Costs
Enter the federal government, which currently provides help through a significant solar incentive known as the Federal Investment Tax Credit (ITC). The ITC significantly quickens the pace of a solar array’s payback time and is one of the most important current incentives for installing solar in the United States. But how does it work?
The ITC is a tax credit that can be claimed on federal income taxes for 30% of the cost of a photovoltaic (PV, or solar) system1 on an eligible property, when the installation commences before the end of 20192. Originally established by the Energy Policy Act of 20053, the ITC has helped annual solar installations in the United States grow by more than 1600% since its implementation in 20064. It has been so successful, in fact, that it was extended in 2013 and maintained in the Tax Cuts and Job Act passed by Congress in 20175.
How does the ITC Work?
A tax credit is similar to any tax deduction that is applied to annual income taxes. In this case, the ITC allows the homeowner to reduce their annual income by 30% of the cost of the solar installation. So, if an installation cost $15,000, a $4500 reduction could be applied in that year’s income tax filing. That’s a significant amount of reduced income, and it helps defray a homeowner’s annual costs in the year the installation took place.
The ITC is applicable to both residential and commercial solar systems (although some details differ), and there is no limit on its value6. According to EnergySage, the average Solar Marketplace shopper on their site saves nearly $9000 on the cost of solar power thanks to the ITC7.
2019 Is the Last Year to Claim 30%
Unfortunately, 2019 is the last year the ITC allows for a 30% tax credit; the deduction drops to 26% for projects that begin construction in 2020 and 22% for projects that begin in 2021. After that, the residential credit will drop to 0, and the commercial and utility credit will drop to a permanent 10%8. This means that now is the time to get the most benefit from this attractive federal incentive to install solar.
Act Now to Go Solar
A variety of incentives on a local and national level can help defray the initial cost of a solar array. These incentives range from real estate tax breaks to energy credits available from local utilities. Financing options may also be available. A trustworthy, knowledgeable LG PRO installer will explain the options available to you in your municipality and state. One of the most attractive and valuable incentives currently available is the Federal ITC, so if you want to get the most value out of your investment in solar power, make 2019 the year you go solar!
Contact LG Solar today so we can help you get started.
