Tax Credit Explainer

Tax Credit Explainer

Federal Solar Tax Credit Explained 

Brighten up your homes with solar power today with freedom in the Greater Houston & beyond with Prosperity Solar

The State of Texas is blessed with sunshine. It makes sense to harness the power of this abundant source of energy by investing in home solar installations. The process of residential solar installations has become easier and more affordable now, thanks to some attractive solar incentives, rebates, and tax credits for homeowners. 

*** This portion can be used as a separate box highlighting the tax credit:

When you install a solar system, 26% of your total project costs (including equipment, permitting and installation) can be claimed as a credit on your federal tax return. If you spend $10,000 on your system, you owe $2,600 less in taxes the following year. The solar tax credit expires in 2022.

What is the Federal Solar Tax Credit? 

The Solar Investment Tax Credit (commonly called the ITC) was first offered via the Energy Policy Act of 2005. Thanks to its popularity and its contribution toward renewable energy goals, the ITC has been extended multiple times. While it was originally set to expire in 2007, the current federal solar tax credit extension is set to expire in 2022. Homeowners can use the federal tax credit for battery storage, installing new systems, and more.

A tax credit is a dollar-for-dollar reduction of the income tax you owe. $1 credit = $1 less you pay in taxes. If you spend $10,000 on your system, you owe $2,600 less in taxes the following year.

It’s important to note that a credit is different than a refund, because you have to owe taxes to claim the incentive. But since most people owe taxes, most people end up being eligible for the Federal Solar Tax Credit.

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