Your Guide To The Solar Tax Credit Extension (2021)

The solar investment tax credit, the ITC, was initially set to be reduced to 22% in 2021 and then phased out in 2022 for residential solar power. At the tail end of December 2020, Congress extended a federal tax credit to 2022, providing a 26 % tax credit through 2020 before dropping to 22% in 2023 and expiring in 2024. 

Take advantage of the federal tax credit extension with Westcoast Solar Energy by investing in renewable solar energy for your home or business this year.

What is the Investment Tax Credit (ITC)?

The solar ITC is a dollar-for-dollar reduction in the income tax you owe. It allows you to deduct 26% of your gross solar energy system cost from your federal income tax. 

To be eligible for the solar tax credit extension, you must:

1. Own the system via cash or a solar loan. PPA Financing or Leases are not eligible. 
2. Have income tax liability. The tax credit can roll over to be claimed in future years up to 5 years after filing. 
3. Have purchased the original installation. 

There is no maximum amount that can be claimed on the cost of PV panels, labor, or balance of system equipment. With the tax credit dropping in 2023, now is the best time to build an energy-efficient solar energy system and reap the savings for years to come.

Why go solar in 2023?

Since the International Tax Credit implementation in 2005, the U.S. solar industry has grown more than 10,000%. It made renewable energy sources more affordable when buying a new solar system for homes, lands, or businesses. 

While the solar federal tax credit has been extended in the past, it is best to capitalize on the 26% tax incentive and save on your energy bill now since extensions aren’t guaranteed. In 2016-2019, the federal tax credit essentially provided taxpayers 30% off their solar installation. It has since lowered to 26% and will be phased out to 10% off commercial solar energy systems and no federal tax credit for residential solar systems in 2024.

Now is the best time to go solar and take advantage of the tax credit. Whether you’re curious about solar energy or ready to commit to renewable energy, at Westcoast Solar Energy, we’re here to help. Give us a call at (707) 644-6450 for more information.