Solar panels have been proven to become a primary source of alternative energy for residential use.  When you’re doing research on going solar, you probably come across the Renewable Energy Tax Credits, or Solar Investment Tax Credit (ITC). This is one of the many implements from the government to make solar energy affordable for all Americans.

Renewable Energy Tax Credits

1. What is Solar Investment Tax Credit?

The ITC, also known as Renewable Energy Tax Credits, allows solar customers nationwide to deduct 30 percent of the solar installation cost from your federal taxes. While the ITC has been available since 2006, it will, unfortunately, begin to decrease after 2019.  

  • In 2020, the federal tax credit will go down to 26% for construction beginning in that year.
  • In 2021, the federal tax credit will be at 22% for construction beginning in that year.
  • By 2022, the commercial tax credit will stay at 10%, but the residential tax credit will drop to 0% for construction beginning in that year.


2. How Can Property Owners Use the Solar ITC?

The ITC is claimed against the tax liability of residential, commercial, and utility investors in solar energy systems.  Homeowners receive credit when purchasing a solar system.  They take 30 percent of what they paid to install the solar system to their federal taxes.  Both residential and commercial property owners are eligible to receive the 30% tax credit if construction for a solar energy system begins before the end of 2019.

3. How Has ITC Impacted the United States?

The residential and commercial ITC has helped the U.S. solar industry grow by more than 8,600%.  The ITC has been one of the most important U.S. federal policy mechanisms that have provided incentives and encourage people to switch to clean energy such as solar.  

2019 is the last year that solar customers will get the most tax credits at 30 percent. Therefore, if you have been thinking of going solar or waiting for the cost to go lower, now is the time to act.