Tax credits on solar panels? There was a time when the tax credits for solar panels were truly compelling. A typical homeowner could claim as much as $7500 for a solar energy system installed on his roof.
Sadly, those days are gone. As of December, 31st, 2017, tax credits for residential energy efficiency expired. Moreover, the tax credit for builders of energy efficient homes – which was up to $2000 – and the tax deductions for energy efficient homes – which was up to $1.80 per square foot – have also expired.
Along with these incentives, here is a list of the energy efficiency tax credits that are no longer available:
- Air Source Heat Pumps.
- Central Air Conditioning (CAC).
- Gas, Propane, and Oil Hot Water Boiler.
- Gas, Propane, and Oil Furnaces and Fans.
- Water Heaters (non-solar).
- Advanced Main Air Circulating Fan.
- Biomass Stove.
- Roofs (Metal and Asphalt).
So where does this leave us? Under the Bipartisan Budget Act of 2018, renewable energy tax credits for solar energy systems, fuel cells, small wind turbines, and geothermal heat pumps now feature a gradual step down in the credit value – until December 31, 2021.
Here is how the credits apply
- 30% for systems placed in service by 12/31/2019.
- 26% for systems placed in service after 12/31/2019 and before 01/01/2021.
- 22% for systems placed in service after 12/31/2020 and before 01/01/2022.
For two of the most popular solar systems – solar water heaters and solar panels – the system must meet applicable fire and electrical code requirements, must provide water or electricity for the home, and for solar water heaters, at least half of the energy generated by the “qualifying property” must come from the sun.
While the tax credit does include installation costs, the home does not have to be the homeowner’s principal residence. Lastly, for solar water heaters, the system must be certified by the Solar Rating and Certification Corporation (SRCC) or a comparable entity endorsed by the government of the state in which the property is installed.
The good news is that energy efficient products that have the ENERGY STAR rating will always save you money. (To attain the rating, the products must use 30% less energy in your home.) And with more than 70 different categories of energy efficient products, even if the tax credits have expired, the ways to save money on electricity continue to grow.
This article is brought to you by Blue Sky Solar and Roofing, a solar and roofing company with offices in Aurora, Colorado and Dallas Texas. Blue Sky specializes in energy efficiency, sustainable roofing and excellent customer service.