Americans are increasingly turning to rooftop solar panels to save money on their energy bills, and over the next decade, federal tax credits could help reduce the cost of installing them.
Tax credits for solar panels are nothing new, but the Reducing Inflation Act, passed last year, broadened and broadened them as part of the government’s efforts to reduce greenhouse gases that contribute to climate change.
If you purchase and install a solar power system in your home by the end of 2032, you qualify for a federal tax credit of 30 percent of the cost, including panels, related equipment, wiring, installation, permits, and fees. Credit will contract to 26 percent in 2033 and 22 percent in 2034. solar credit It is one of several residential clean energy credits included in the 2022 Act.)
“It’s a great time to think about adding solar power,” said Becca Jones-Albertus, director of the Energy Department’s Office of Solar Technologies, which promotes the development and deployment of solar power. solar technology.
Solar panels convert sunlight into electrical energy. Last year, the number of residential installations exceeded 702,000, more than double the total for 2018, according to data from the Solar Energy Industries Association. The group appreciates that 15 percent of homes in the United States will have solar panel systems by 2030.
A solar tax credit reduces your tax bill dollar for dollar; If you are not owed federal tax, you will not receive any of the credit as a refund. However, you can carry forward any unused balance to future tax years, says April Walker, principal director of tax practices and ethics at the American Institute of Certified Public Accountants.
The company’s CEO, Vikram Aggarwal, said the typical size of a residential solar system is nine kilowatts Energy SageAn online marketplace that connects consumers with solar energy companies. Based on prices reported by the National Renewable Energy Laboratory, the installation cost of this system is approximately $27,000, and the credit will set you back $8,100.
Larger systems can be much more expensive, but there is no maximum credit limit. On average, lower electricity bills, along with tax breaks and incentives, help homeowners recoup the cost of the system in about eight years, Aggarwal said.
Your actual savings depend on factors such as how much electricity you use, how many panels are installed, the orientation of your home (south-facing roofs get the most sun in the Northern Hemisphere) and how much shade your home has, said John Kosman, chief management officer. Sales Director at SunPower, a national solar installer. SunPower has a website calculator that can estimate your potential savings.
Some states offer their own tax incentives, and utilities may offer rebates for solar installation. In some cases, Ms. Walker said, rebates may affect the size of the federal credit, so consult a tax professional for help calculating your potential benefit.
If you are due to get a new roof, said Dr. Jones-Albertus, it may make sense to replace it before investing in solar, because removing and reinstalling panels can be costly. She said some solar contractors also install roofers or work closely with roofing companies, so you might be able to save by doing that at the same time.
Ms Walker said some solar contractors offer the option to lease the system rather than buy it, but in that case you wouldn’t own it, so you didn’t qualify for the tax credit.
Here are some questions and answers about home solar energy:
How can I find a reliable solar installer?
The Solar Energy Industries Association recommends that you look for a contractor that is certified by a reputable group such as North American Council of Certified Energy Practitioners. Mr. Aggarwal recommended obtaining quotes from at least three, preferably five companies, including local, regional and national operators. ask who will do this work; Some use in-house installers, while others hire outside labor. The association offers a Guide which guides consumers through the process. Often, the initial assessment can be done remotely, using satellite images of your home.
Melanie McGovern, a spokeswoman for the Better Business Bureaus International Association, said solar installations, like any home improvement project, can attract disreputable contractors. A legitimate installer will answer your questions, provide a detailed cost estimate, and give you time to consider it. Ask for references, and research the company’s online reputation. Follow up if the representative pressures you to sign a contract immediately, or says the price is only right for that day, “that’s a red flag,” said Mrs. McGovern.
Can I get the federal tax credit if I install solar panels on my vacation home?
maybe. Ms Walker said solar panels installed on a second home might qualify, as long as you live there part-time and don’t rent it out to others.
If I install solar panels, will I still need electricity from my utilities?
In most cases, yes. Solar panels rely on the sun, so your system must remain connected to the utility grid for power at night and on cloudy days. Many utilities offer “net metering,” which allows you to send extra electricity into the grid in exchange for credits on future bills.
But some countries like CaliforniaMr Agarwal said Amazon was undervaluing credits, leading consumers to consider using solar batteries to store electricity instead. The Internal Revenue Service says solar batteries can add thousands of dollars to the cost of installation, but they qualify for the federal tax credit as long as they can store at least three kilowatts.
What if my house is not suitable for solar panels?
Consider subscribing to a solar society The project, which allows you to get a credit on your electricity bill for the energy generated from part of the solar field or “farm”. Forty-one states and the District of Columbia have them At least once community project. Subscribers save between 5 and 15 percent a year on average, and can cancel at any time, according to EnergySage.