Solar Tax Credits Stepping Down Soon
Changes are coming to solar incentives.
Everywhere you look, solar panels seem to be more and more common; from homes to businesses and even farmland. Recent studies have shown that carbon emissions are decreasing in most states. Lately, many homeowners are adopting solar energy due in large part to the financial benefits it currently offers. This is because the cost for solar installation is at an all-time low and there are income tax credits offered by both the federal government and the state of South Carolina. However, these incentives will not exist forever. Solar tax credits are stepping down. In fact, the federal solar tax credit will begin stepping down at the end of this year, so it is valuable to understand how it could benefit you.
What are the federal solar tax credits?
The federal solar tax credit, also referred to as the investment tax credit (or ITC), allows you to deduct 30% of the cost to install a solar system on your federal tax return. It can be used for both homeowners and business owners and there is no cap on its value. The only requirements are that you own the solar system and have tax liability.
According to energy.gov, “If the federal tax credit exceeds tax liability, the excess amount may be carried forward to the succeeding taxable year.” The form to file for the federal solar credit can be found here.
These credits are scheduled to step down from 30% to 26% for systems placed in service in the year 2020. Less than 4 months away. But there is still time to schedule an installation to fit in this time frame.
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What are the South Carolina solar tax credits?
South Carolina has one of the most generous incentives in the country, offering a 25% tax credit. Limitations include: (1) a value cap of $35,000 and (2) a maximum amount of $3,500 per year or 50% of your state tax liability (whichever is less).
For both federal and state tax credits, you do not have to use the credit in the first year and it can be carried forward. Federal may be carried an unlimited amount and South Carolina is limited to 10 years to carry over.
Solar tax credits stepping down
The solar tax incentives are not going to be around forever. 2019 is the last year to claim the full 30% federal solar tax credit. The federal solar tax credit will be lowered to 26% in 2020 and then 22% in 2021, which makes the decision to switch to solar more time sensitive if you would like to reap all the current tax rewards. Otherwise, you are missing out on between $1,500 to $2,000 worth of savings.
Can you still install solar after 2020?
Yes! You can still install a solar system after this date. System costs and performance are not impacted.
Now is the time to go solar in South Carolina!
As 2020 approaches, RIGHT NOW truly is the best time to switch to solar in South Carolina. It can take at least 30 to 60 days to install and hook up a system because of a variety of uncontrollable external factors, such as permits and utilities. The current federal and state solar tax credits are at the highest value they will ever be. Combine that with the decrease in price for solar installations and it is no wonder people are motivated to go solar now. If you would like to have your home evaluated for its solar potential and to find out which tax credits you qualify for, fill out this form:
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Southern Current is proud to be one of the top Solar Installers in the Southeast, with specialties in residential solar for homes, commercial solar for businesses, and utility-scale solar farms for property owners and utilities. Schedule a solar consultation today to receive a free analysis of how much money you could be saving with solar!