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Don't Miss Out on the Federal Solar Tax Credit
August 26, 2020
If you’re still debating whether to add solar panels to your home, the window for getting the highest return on your investment is narrowing. The remaining months of 2020 mark an important year for adding solar—both for its benefits and for the exceptional solar incentives available. With a solar panel upgrade from the pros at Brower Mechanical, you’ll also be gaining greater energy independence by reducing your reliance on your local utility and the unpredictability of the California electricity grid.
What is the Federal Solar Investment Tax Credit?
The Federal Investment Tax Credit (ITC) solar incentive was created to encourage homeowners and businesses to invest in solar PV systems. The amount of the tax credit will step down each year, until it disappears completely for Sacramento area homeowners in 2022. Here’s the year-by-year rundown:
2020: Tax credit is 26% for residential and commercial systems
2021: Tax credit reduced to 22% for residential and commercial systems
2022 onwards: Tax credit reduced to 10% for commercial systems while residential systems will no longer earn an incentive!
How Does the Federal Solar Tax Credit Work?
The federal solar tax credit in 2020 equals 26% of the cost to install your solar PV system. What does a 26% tax credit mean? Well, a solar installation that costs $20,000 in 2020 would qualify for a tax credit of $5,200 to deduct from your 1040 tax form. Plus, if your federal taxes owed are less than the solar tax credit you qualify for, you can roll out the remaining balance in the next tax year.
If you delay until 2021, you’ll still qualify for a tax credit, but the amount would only be 22% or $4,400. That’s a loss of $800 in potential savings! This makes it easy to see why 2020 is the year to switch to solar.
How to Claim the Federal Solar Tax Credit on Your Taxes
If you’re wondering how to qualify for the solar tax credit, it’s just a matter of completing some paperwork. Though you do have to own your solar PV system, own the property where the solar panels are being installed and have sufficient taxable income. It’s not difficult to apply your tax savings to what you owe in federal taxes when you’re filing. There are three things to know about claiming your Federal Solar Tax Credit:
Keep all receipts related to your solar installation project.
Obtain and fill out the IRS Form 5695
Add the renewable energy credit information to your IRS Form 1040.
Reduce Power Grid Reliance
California’s aging utility grid is another powerful incentive to become more self-reliant with solar panels for your Rocklin CA home. PG&E’s Planned Public Safety Power Shutoffs (PSPS) are likely to affect many homeowners in the greater Sacramento area for years to come, and it’s hard to predict when and where these planned power shutoffs will occur. Protect your family and maintain electric independence with a combination of solar electric panels, back-up battery storage, or back up generator installation to help avoid the uncertainty of planned or unexpected power outages.
Uninterrupted Power with Solar + Generator or Solar + Battery
Many folks don’t realize that solar panels need to be connected to the power grid in order to produce electricity. That’s why the solar installer pros at Brower Mechanical often install backup generators or a solar battery to complete a residential solar panel system. This addition to your PV solar power supply keeps your greater Sacramento CA home running smoothly whenever the power grid shuts down.
It may sound a little complicated, but the solar experts at Brower Mechanical know the safest and most reliable ways to help you gain independence from your utility’s unpredictable ups and downs. With backup power, you also may be able to avoid the added costs of time-of-use electric rate adjustments.
Solar Rebates & Financing
Even with the generous Federal Solar Tax Incentive credit, many families can still take advantage of other incentives, like rebates & financing, for their solar PV panel system upgrades or SGIP incentives. Whether it’s in the Greater Sacramento area or other nearby Northern California municipalities, the renewable energy experts at Brower Mechanical can help you identify all the additional rebates available. And with interest rates at historically low levels, there’s never been a better time to invest in your solar panel system.