If you have heard about the savings that solar energy provides to homeowners here in Illinois, you no doubt have heard about the benefits you can see on your taxes after your solar installation is complete. But you may be wondering “What’s the big rush?”
The Federal program that offers big savings on your taxes when you install solar panels on your home is in its final year of full value and will subside for homeowners by the year 2022.
The Final Year of the Federal Solar Tax Credit
The Federal Investment Tax Credit is also commonly referred to as the ITC and was first implemented in 2006. The ITC has helped solar energy to grow 59% since it was enacted. A 2015 extension outlined the end of the Federal program, which will taper off the allotted 30% deduction after 2019, and that deduction will completely diminish by the year 2022.
Here’s how the Investment Tax Credit will diminish over the coming years:
2019: Tax credit remains at 30% for residential and commercial
2020: Tax credit reduced to 26% for residential and commercial
2021: Tax credit reduced to 22% for residential and commercial
2022 onwards: Tax credit reduced to 0% for residential and commercial will remain at 10%.
So, what does that mean for you? It means 2019 is the last year to receive the full benefit of the Federal ITC, so schedule your solar installation by the end of this year!
How to Receive Your Solar Tax Credit
In order to take advantage of the Federal ITC, take all of the receipts related to your solar installation and calculate the total. You can deduct 30% of that total from what you owe in federal taxes in April. This is done through IRS form 5695 and the usual form 1040. But if your solar installation isn’t completed by the end of 2019, the allowed deduction drops down to 26% for the year 2020, 22% for the year 2021, and after that only commercial solar installations will qualify for a tax benefit past 2022.
So how much money would you be losing out on if you waited to install solar panels until next year? Let’s look at some numbers.
Running the Numbers on the Solar Tax Credit
Let’s say you spend a total of $30,000 on your solar installation in 2019. When it comes time to do your taxes next year, you will be able to deduct $9,000 from what you owe the federal government, and if that $9,000 covers more than what you owe then the remainder will roll over into your 2020 taxes. But if you were to wait and start your installation in 2020, that deduction would drop from $9,000 to $7,800 — a difference of $1,200! And if you were to wait even longer, for 2021 that deduction becomes $6,600 — a $2,400 loss.
This is before any additional financial incentives that are offered by Illinois utility companies, SREC’s, and other manufacturer rebates, which you can read more about in our recent blog.
Get the Most out of Your Solar Panels, with WCP Solar
When it comes to solar installation here in Illinois, it is absolutely essential to trust a solar contractor that offers full service, from start to finish. At WCP Solar, we will meet with you to discuss your renewable electricity goals for your residential or commercial solar photovoltaic (PV) system, design a solar array just for you, install it with precision and care, and make sure you receive any and all financial incentives along the way.
Our team has you covered from beginning to end, so don’t wait for the Federal Investment Tax Credit to end before you schedule your solar installation in Cook, Kane, La Salle, Lake, Will, DuPage counties!