Need To Know: 2019 Is The Last Year To Capture The Full 30% Federal Solar Tax Credit!
The investment tax credit (ITC), also known as the federal solar tax credit, allows you to deduct 30 percent of the cost of installing a solar energy system from your federal taxes. However, 2019 is the last year to reap the full 30% ITC. You must have your solar panels installed by December 31, 2019 or you will miss out on the 30% federal tax incentive! In addition to the full 30% Federal Tax Credit, you can capture an additional 25% New York State Tax Credit & NYSERDA cash rebate in 2019.
The ITC was created in 2006 to help the solar electric power industry grow. In the early days, prior to 2006, solar was expensive compared to more traditional sources of energy. In an effort to help grow public support for renewable energy, the federal government created the solar investment tax credit to help even the playing field and position solar to become a thriving industry. The plan worked and since its establishment, the ITC has helped the solar industry expand. However, the ITC is designed to ramp down and eventually be eliminated. Sadly, that day is quickly approaching.
The original ITC program was designed to expire in 2007. Thankfully congress extended the ITC, but it again came under threat and was saved by legislation in 2015. The current ITC will begin to ramp down in 2020 and will go away completely by the end of 2021. Only utility-scale solar, such as investor-owned utilities or commercial solar systems, can still get renewable energy credits beyond 2021. They can also get the federal solar tax credit on non solar pv systems such as geothermal heat pumps, fuel cells, or other energy efficiency installations but rooftop solar systems and ground mount solar installations for homeowners, the investment tax credit ITC will no longer exist after 2021.
Here are the specifics:
- 2016 – 2019: The tax credit remains at 30 percent of the cost of the system.
- 2020: Owners of new residential and commercial solar can deduct 26 percent of the cost of the system from their taxes.
- 2021: Owners of new residential and commercial solar can deduct 22 percent of the cost of the system from their taxes.
- 2022 + beyond: Owners of new commercial solar energy systems can deduct 10 percent of the cost of the system from their taxes. There is no federal credit for residential solar energy systems.