If you’re considering installing solar panels in your home, you might be doing so to help lower your carbon footprint and embrace renewable energy. You might even be doing it to help save on your overall energy bill. However, did you know that installing solar panels might also save money on your taxes?
There are actually many tax benefits of solar panels that you need to consider if you’re on the fence about going forward with installation.
What do you need to get familiar with? Read on and we’ll walk you through what you need to know.
1. Understanding the Basics
The Energy Policy Act of 2005 was first instituted in 2005. Within this act, the federal government sought to encourage the average American to embrace renewable energy through the implementation of various tax credits.
These tax credits have been extended many times, though they are currently set to expire in the year 2024. Up until that point, homeowners who install solar energy systems can save money on their taxes thanks to this act.
The way the tax incentive works is fairly simple. When you install a solar power system (as long as it is before 2024!) you will be rewarded with a tax credit that is worth 26% of the total costs.
Those costs include installation, permitting, purchased equipment, and essentially any associated cost that comes with installing your system.
Just make sure to keep your receipts! This is one of the many advantages of solar energy that you will not want to miss out on.
2. A Credit is Not a Refund
One important distinction to make about this amazing tax opportunity. A tax credit is not the same thing as a refund. That is to say, you have to owe taxes in order to take advantage of this opportunity.
If you owe money to the government, the 26% that we mentioned is going to be deducted from that total. That’s great news for you and for solar energy as a whole.
However, if you don’t end up owing the government any money at all, you’ll find that you can’t actually benefit from this refund. You can’t deduct a total from something that is already zero!
3. You’re Likely Eligible
Many people get confused when they start to read the fine print related to this tax credit. Some homeowners convince themselves they might not even be eligible for the credit.
If you have or plan to do any kind of solar work in the recent past or future? You’re likely eligible. The law is pretty wide-ranging in the kind of work that it accepts.
Tax Benefits of Solar Panels
If you’re looking to enjoy the many tax benefits of solar panels, you’ll want to get familiar with some of the information listed above. You’ll find that there may be more reasons to make the switch to solar than you initially assumed.
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