The Investment Tax Credit (ITC), commonly referred to as the federal solar tax credit, has been extended at 26% for the next two years. Meaning solar customers will be able to deduct approximately a fourth of their solar systems cost from their federal taxes. While this is good news for a government subsidized green future, the extension of the ITC also reignites the race for customers to lock in their maximum amount of savings. Additionally, solar customers can still capture more savings in the form of the New York State Tax Credit and the quickly depleting NYSERDA cash rebates.
The extension of the ITC was a welcomed addition to the COVID relief package back in December 2020. The ITC, which at the time was scheduled to drop to 22% in 2021, had not been updated since 2016. The solar industry’s unanswered question is this: will the tax credit be extended again in the future, or will this be the final extension? The federal solar tax credit was designed to reward early customers moving into green energy and level the playing field for renewable energy as an industry against long standing non-renewable sources. Here at Kasselman Solar we are confident in the future expansion of all renewable sectors and are hopeful that more federal programs will be brought in to further subsidize these industries. However, this will create a rush on all forms of renewable energy that will heavily spike demand and create a nationwide backlog for sources of alternative energy including solar panels.
In the next four years the United States will be entering an energy revolution comparative to the Industrial Revolution of the early 19th century. For customers, this means that those who move on solar faster will be rewarded more as some rebate programs will run out of funding in the coming years.
As for the Investment Tax Credit (ITC), here is the most updated schedule we have:
- 2021-2022: The tax credit will remain at 26% of the cost of the system.
- 2023: The tax credit will drop to 22% of the cost of the system.
- 2024: The residential sector will drop to 0% while the commercial and utility sectors will be able to retain a permanent 10% credit for the foreseeable future.
Act now to secure the maximum amount of savings while rebates and tax credits are high, secure your solar now while supplies last.