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How much Federal Solar Tax credit will I receive in 2020?

How much Federal Solar Tax credit will I receive in 2020?

In 2020 the Federal Solar Tax Credit (ITC) decreased. You want to know how much Federal Solar Tax Credit you will receive in 2020? Read more.

 

How much Federal Solar Tax credit will I receive in 2020?

If you decide to have your own solar system, there is a chance that you will qualify for the Federal Solar Tax Credit (ITC). This amounts to 26% in 2020 but will decrease further in the coming years. So, it is time to find out if you are eligible and for you to decide for a solar system.

Recently we have already reported about the Federal Solar Tax Credit and how it will develop in the next years. In 2019 it was still 30%. In this year it will be 26% and in 2021 it will drop further to 22%, until in 2023 it will even be only 10%.

Solar system on the roof of residential building

It was not always possible to claim tax advantages if one decided to have an own solar system. But the legislation has changed, so why not use the advantages? We would like to point out here, however, that this is a purely reporting article and exact tax advantages should be discussed with your own tax consultant.

Currently, once the system has been built and installed and is operational by the end of the ITC period, it is possible to apply for a tax credit. This applies to residential and commercial solar.

What is the Federal Solar Tax Credit?

The ITC has been in existence since 2005 and was originally intended to be available until 2007. Fortunately, it has been extended. However, the numbers are now changing.

Note that this is not a tax deduction, but a tax credit that allows you to deduct your federal taxes.

Do I qualify for the Solar Tax Credit?

Basically, everyone is qualified for the installation of a solar system. However, there are exceptions, but if you only lease the system or use a solar PPA, you are not entitled to the – for now – 26%.

How do I calculate the 26 % solar ITC?

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Are you a residential homeowner?

Are you a residential homeowner?

Then you have to calculate the 26 % on the net installation costs. This means that you take it into account after deducting state discounts or utility rebates.

Let us calculate an example. Let’s say your system costs a total of $11,500. You get a utility or state rebate of $1,500, so a total of $10,000 is due to you. You use this amount now, and add it to your Solar Tax Credit:

26 % x $ 10,000 = $ 2,600 solar tax credit with which you can pay your federal tax.

Are you a business owner?

Are you a business owner and is your project a commercial system?

Then your tax credit will be calculated slightly different.

In this case the gross installed costs of the solar system play a role. With the same numerical values from before, it would look like this:

26 % x $ 11,500 = $ 2,990

We help you to find answers to your questions:

How much can I save by switching to solar energy?
Am I eligible for the Solar Tax Credit?
How high is the ITC in my case?

Contact us!

 

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