Solar energy has become an integral part of many homes in the United States, especially because it is cheaper and more reliable than electricity. There are many benefits of installing solar. For instance, you will enjoy great tax rebates and other financial incentives from the government.
Studies have shown that these tax rebates can reduce the cost of installing a solar system by between 26 and 50 percent. This article talks about the financial and government rebate options available for residential solar systems.
Who is Eligible for Solar Incentives?
These financial benefits accrue to every owner of a solar system. So, if you purchase your solar system upfront or with a loan, you will be eligible for all the solar rebates, SRECs, and tax credits for solar systems. But if you’ve leased the system, the third-party owner is the one who will enjoy these incentives.
Common Solar Rebates and Financial Incentives
Investment Tax Credit for Solar
The investment tax credit (ITC) is a federal solar incentive designed to give back to the owners of solar systems 26 percent of the cost of their solar systems on their taxes. Unlike a deduction, which reduces your taxable income, a tax credit offsets a certain amount from your taxes directly. This means that instead of getting taxed on a lower taxable income, the incentive does away with what you could have paid in taxes. Sometimes this solar incentive comes back to you as a refund.
In some American states, you will get supplementary tax credits for setting up a solar system in your home. This incentive works almost the same way as the ITC, but for state taxes. Although these tax credits vary by state, they can significantly impact your taxes, especially when combined with the federal ITC.
Some states, utility companies, and local governments offer upfront cash rebates to people who install solar systems in their properties. However, these rebates are only available for a limited amount of time. They disappear when a certain number of people have installed solar systems in an area. Thankfully, cash rebates can reduce the cost of your solar system by 10-20 percent.
Solar Renewable Energy Certificates (SRECs)
Some states have developed impact portfolio standards requiring utility companies to generate a certain percentage of their power from renewable resources like solar. Residents of these states get solar renewable energy certificates (SRECs) for the amount of electricity produced by their solar panel systems. You can sell your SRECs for hundreds (or even thousands) of dollars, depending on your state’s SREC market. For more information on solar rebates, talk to J Wales Home Solutions.