Over the last couple of years, homeowners have been increasingly installing solar photovoltaic or PV in their residences to cut down on their dependency on grid energy. In addition to this, they also get to enjoy federal tax credits for their installations. It’s vital that you understand the federal solar tax credit if you plan to install solar photovoltaics (PV) in your home.
What Is the Federal Solar Tax Credit?
Firstly, a tax credit is an incentivized dollar-for-dollar reduction of the income tax that you would have otherwise owed. This means that if you receive a $1000 tax credit, that amount of tax that you would have to pay would be reduced by $1000. On this note, the federal residential solar energy tax credit is a form of the tax credit offered by the federal government. It targets homeowners who want to install a solar photovoltaic system in their residences. The tax credit is applied as a percentage of the system’s cost.
The federal residential solar energy tax credit guidelines state that the photovoltaic system must be “placed in service” with the tax year of the purchase, and the home that it generates electricity for has to be in the United States. The current tax credit stands at 26% for systems installations between 2020 and 2022 and 22% for 2023, with no limit on the maximum tax credit claim amount. At the start of 2024, the tax credit will expire unless Congress opts to extend it.
Am I Eligible to Claim the Federal Solar Tax Credit?
You likely are wondering where you are eligible to enjoy the federal solar tax credit. Here are the criteria for eligibility.
- The solar photovoltaic system was installed starting January 1, 2006, to December 31, 2023.
- The solar PV system is on your primary or secondary residence within the US. Solar PV systems for an off-site community solar project are eligible for the tax credit based on the electricity generated when the electricity generated doesn’t surpass your home’s consumption. In such instances, the IRS allows you to claim a section 25D tax credit for buying part of the community solar project.
- Whether you purchased it with cash or through financing, you own the solar photovoltaic system. This means that you should be leasing the system or be in an arrangement to buy electricity generated by a solar PV system that you don’t own.
- The solar PV system should be the “original installation.” This means that you should be using it for the first time, or it should be new.
Do You Need Solar PV Installation Help in Scottsdale, Arizona?
Arizona is undoubtedly one of the best states to have a solar PV system for your home. As a resident of Scottsdale, Arizona, and the surrounding areas, you can trust Aneva Solar for all your solar PV needs. We pride ourselves in providing top-quality solar installation and have earned a reputation for strictly using superior components with over 20 years’ warranty. We have a culture of extreme professionalism, first-class customer service, and timeliness. At Aneva Solar, we offer our clients competitive quotes for all the services they need. Call us today for top-class solar installation assistance.