Tax Season is Over
2018 taxes just wrapped up for the year. Maybe you received some money back and are looking what to invest that money into now? You’ve been looking at reducing your electricity bills for some time and you’ve wanted to get a solar system for a few years. Now is probably the best time for you to go and take that leap of faith. Why? The solar tax incentive is the reason why.
2018 Is the Last Year
If you’ve ever looked at solar before, you’ve probably heard of something called an Investment Tax Credit, or ITC for short. This credit is a government incentive that allows home and businesses who are looking to get solar, to be able to take up to 30% of the cost of the solar system and write that off from their tax liability. Let us repeat that, you can take 30% of the total system cost, and receive that back from the taxes that you have paid into the government from your income. Wow!
This solar tax incentive has been in place for a number of years now and has helped millions of people go solar at a discount because the government is essentially thanking them for going green. Because of the ITC, systems that normally cost $60,000 to purchase and install, now cost customers $42,000 after they get their tax incentive. Sometimes this incentive is returned over a period of a couple years since people on a W-2 typically pay into the government more than what they need to. Other times, it means homeowners or businesses that owe money at the end of the year, don’t have to pay as much to the government because they are able to take their ITC and apply it to that tax obligation.
That’s About to All Change
2020 on the other hand is going to change. Now before you get up in arms and yell at us, let us explain. The solar tax incentive isn’t going away, instead, the ITC is decreasing in size. Currently, the tax credit is sized at 30%. This allows customers to take up to 30% off their system. Next year in 2020, that will decrease to 26%. At first you might think 4%, that’s not much. But this means that your $60,000 solar system is now $44,400 instead of $42,000 after the ITC is taken into account. $2,400 can’t buy you a house, but it could pay for a nice vacation.
Think about that for a second. If you are looking to get solar and you decide to get solar installed next year, it could cost you a vacation, or a down payment for a nice car. From there it really goes down hill. In 2021 it will be only 22% and in 2022 it is expected to drop to 10%.
What’s It All Mean?
Essentially, if you are wanting solar, do yourself a favor and give it some serious thought. Solar panels are not going away, and neither are the savings that you will be rewarded with by converting from using the electricity from utility companies to using electricity from your own solar system. But what is going away is the tax credit incentives that you could receive by installing solar this year. And let us also clarify, you have to have the solar system installed in 2019, not just purchased. This alone makes people go crazy in the fall trying to get solar purchased and installed, but the install crews cannot keep up with the sudden demand of customers.
Don’t Be Afraid
All of this information isn’t here to scare you though. It’s here to help keep you informed. You deserve to get solar at a price that makes sense to you. With getting a great system, the government is also helping support your decision by allowing you to relieve some tax burdens through the use of the Investment Tax Credit. Here at Solar Brothers, our main goal is to educate you and help you make an informed decision about solar. We work with the best manufacturers, financing, and install companies in the nation. Along with using the best people and products, we also want to make sure you are well equipped to benefit the most from solar. This is why we are telling each of our clients that the time is now. The longer you put off getting solar, the less leverage you have for tax savings.
To learn more about this, you should do two things…schedule an appointment with us to see if solar is right for you, and talk to your tax adviser or CPA. We are not professionals in the world of taxes, but we are professionals in helping the world go green. Take the leap and change the world, one solar system at a time!