The federal solar investment tax credit, or ITC, is a program from the government that provides a tax credit to homeowners who invest in a photovoltaic power system. It returns a percentage of the cost for the system as a credit that is applicable to federal income taxes. It was enacted in 2006, reduced after 2019, and was originally slated to be phased out by 2022.
When the program was introduced, the ITC offered to return 26% of the homeowner’s installation costs as a tax credit. That meant if a homeowner purchased a $20,000 solar power system, they could get a tax credit of $5,200. Not only that, but if the homeowner’s tax bill was not high enough to use the whole credit, the ITC program offered a “roll over” option, so the remaining credit could be used on the following year. What’s more, the credit was often used to offset things like expenses, labor costs, and developer fees. Understandably, the ITC was a very popular program from 2006 to 2020.
All Is Not Lost!
The program was scheduled to be phased down over time, reducing the credit from 26% to 22% in 2021, then it would be made unavailable in 2022. But that schedule was B.C. – as in “Before COVID.” The pandemic turned many businesses and livelihoods upside-down. Many people needed help to make ends meet, let alone purchase solar power systems. The federal government passed several programs to help the country get back on its feet, and one of them was an extension to the ITC.
As it currently stands, homeowners can still take advantage of the ITC at the 26% rate throughout 2022, as long as the homeowners occupy the home by the end of the year. Starting in 2023, the credit will “step down” to 22%, and the program will phase out for homeowners in 2024.
The ITC makes the purchase of photovoltaic systems much more appealing and affordable for many homeowners. Instead of having to cut corners or settle for low quality options, many more homes benefit from SunPower integrated solar power systems installed by Solaron. SunPower’s solar panels for homes produce 55% more energy over 25 years than most panels on the market, providing more power for your home and less cost on your electric bill. Not only that, but the entire system comes with a comprehensive 25-year warranty, the best in the solar industry!
Act to Get the ITC!
With the pandemic mostly behind us, another extension to the program is unlikely. 2022 is the best time to find out how your home can benefit from a photovoltaic power system as well as a tax credit from the ITC. To find out more, please contact Solaron at (916) 631-9293 in Sacramento, and (408) 292-4328 in the Bay Area. If you prefer, please schedule a free solar analysis using our online form here on our website.