Last Chance to Take Advantage of Higher Tax Credits on Solar Systems in 2020
Homeowners who are thinking about getting a residential solar system should be paying attention right now: December 2020 is the last chance you have to get the higher tax credits on these systems when you have one installed. If you’ve been on the fence about whether you want to do it, now is the time to decide so you can take advantage of these financial incentives. Let’s talk about what those incentives are, and how they will change in 2021.
The Federal Solar Tax Credit
One of the most beneficial things about getting a solar system (besides the renewable energy and little to no cost for your electricity each month) is the ability to get a federal tax credit on your solar system. Since you have to pay up front, or finance the cost of the system with a home equity loan or other loan, these savings can help offset the initial expense of the system. That helps you realize the savings and a return on your investment even sooner.
You purchase a residential solar system for your home
You can deduct 26% of the cost for that system on your taxes
It is a tax credit, which means you can only us it to offset taxes you owe (you won’t get a refund if it is more than what you owe)
If you owe less than your tax credit for a solar system, you can “save” the remainder and use it in a future tax year to offset taxes you owe, up to five years
So, for example, if your solar system costs $20,000 you can deduct 26% ($5,200) on your taxes. If you only owe $2,600 in taxes for 2020, you can save the other $2,600 to offset additional taxes you owe anytime between 2021 and 2026.
The biggest reason to pull the trigger in 2020 is that this credit goes down to just 22% in 2021, so on the same system you will only get $4,400 in savings.
The State Solar Tax Credit
Utah also offers solar tax credits for homeowners, and like the federal credit, it will go down starting in 2021. The state credit is 25% of the total cost of your system up to a maximum of $1,600 in 2020. But the cap gets lower each subsequent year, so if you wait until 2021, you can only claim up to a maximum of $1,200. Between that and the federal credit you could be leaving thousands of dollars on the table by waiting.
Contact PRVL Energy Right Away
To learn more about the tax credits, and how easy it can be to start the process of getting residential solar, call PRVL Energy today.