Solar Energy Tax Credits 2015
The year 2015 saw a significant change in the tax credit policy for solar energy in the United States. Prior to that, the tax credit was a mere 10% of the total cost of installation, which was often not enough to incentivize homeowners and businesses to switch to solar energy. However, with the implementation of the Investment Tax Credit (ITC) that year, the policy became more favorable for those who wanted to go solar.
Here's everything you need to know about the solar energy tax credits of 2015:
What is the Investment Tax Credit (ITC)?
The ITC is a tax credit that was introduced for solar energy systems in 2006. Initially, it was set to expire in 2007, but it has been extended multiple times since then. In 2015, it was extended for five years, making it one of the most significant policy changes in the solar energy industry in recent years.
Under the ITC, homeowners and businesses can get a credit worth 30% of the total cost of installation of a solar energy system. This includes not just the cost of the solar panels but also the cost of installation, wiring, and other associated expenses.
Who is eligible for the ITC?
Any homeowner or business that installs a solar energy system is eligible for the ITC. This includes both residential and commercial properties. It's important to note that the system must be installed by December 31, 2019, to be eligible for the 30% credit.
What happens after 2019?
Starting in 2020, the ITC will begin to phase out. Homeowners and businesses that install a solar energy system in 2020 will be eligible for a credit worth 26% of the total cost of installation. In 2021, the credit will drop to 22%, and in 2022, it will drop to 10% for commercial properties and be eliminated entirely for residential properties.
Why is the ITC important?
The ITC is an essential policy change that has helped to accelerate the adoption of solar energy in the United States. The 30% credit has made solar energy more affordable and accessible for homeowners and businesses, allowing them to save money on their electricity bills and reduce their carbon footprint.
How to claim the ITC?
To claim the ITC, homeowners and businesses must file Form 5695 along with their tax return. The credit will be applied to the taxpayer's federal income taxes for the year in which the system was installed.
Other incentives for solar energy
In addition to the ITC, there are other incentives that homeowners and businesses can take advantage of when installing a solar energy system. These include state and local tax credits, rebates, and grants. These incentives can vary depending on the state and local government policies, so it's essential to research what incentives are available in your area.
Conclusion
The 2015 tax credit change was a game-changer for the solar energy industry in the United States. The ITC has made solar energy more affordable and accessible, allowing homeowners and businesses to save money on their electricity bills and reduce their carbon footprint. While the credit will begin to phase out in 2020, there are still plenty of incentives available for those who want to switch to solar energy.
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