Tax Incentives for Homeowners Converting to Solar Energy in 2019
Converting to solar energy is a positive step toward our nation’s energy independence, as well as being a good strategy for minimizing environmental destruction caused by continued mining, and transporting of dirtier substances like coal and oil.
To encourage the continued expansion of the use of solar in 2019, state governments, utility companies and many local municipalities across the United States are offering tax breaks and financial incentives that make solar more and more accessible to today’s homeowners. With the right combination of incentives, homeowners can significantly reduce the cost of a solar panel system.
Solar Investment Tax Credit
The federal government provides a solar tax credit, also known as an investment tax credit (ITC) that allows homeowners and businesses to deduct up to 30 percent of their solar panel system less any cash rebates. Currently, this federal solar tax credit is due to phase out in 2022, making 2019 a perfect year to go solar.
State Tax Credits
Many states offer additional tax credits and incentives with California, Hawaii, Nevada, and New York leading the way. An additional 29 states have significant incentives as well. Qualified installers can help you understand what your state offers as the amounts vary significantly state by state.
Do your homework because some states, local municipalities, utility companies or other organization interested in promoting solar energy often offer cash rebates for solar system installation. Again, any reputable installer will know what is available in the area they service. It’s important to ask because this type of rebate is generally available for a limited time and ends once a certain amount of solar has been installed. This type of rebate, when available, can reduce the cost of your system by an additional 10 to 20 percent, making them quite attractive.
Solar Renewable Energy Certificates (SRECs) & Performance-Based Incentives
Some states require their utility companies to generate a percentage of their electricity from solar power. If you live in one of these states and install a solar system, your system generates solar renewable energy certificates (SRECs) that your utility company will buy from you to count toward meeting their solar power usage requirements. Actual state requirements are diverse in implementation. Ask your contractor about whether or not your state has SREC requirements and, if they do, how they work. Some states offer performance-based incentives that are good because the incentive rates are determined when your system is installed. Research how your state handles incentives. It could be worth a lot over the life of your system.