The 2023 Solar Tax Credit Explained
About 4 in 10 homeowners have considered going solar. Are you one of them? Going solar is a great way to help the environment while saving money on your power bills, but many people are unnerved by the upfront cost.
Luckily, the solar tax credit can help offset the cost so solar energy is more accessible.
But what is the solar tax credit? Let's talk about it! Read on to learn all about this incentive to go solar.
What Is the Solar Tax Credit?
The solar tax credit is a credit that the government provides to encourage people to invest in solar energy by getting residential solar panels. The government understands that it's important to encourage residents to choose green energy for the sake of the planet, but also that going solar can be expensive.
As a result, they created the solar tax credit. This allows homeowners to get money back after buying their solar panels.
The solar tax credit changes over time. In 2023, it covers 30% of your solar panel project costs. To make that simple, if you were to pay $10,000 for your solar panels, you'd be eligible for a solar tax credit of $3,000.
You don't get that money directly, but it does lower your federal income taxes, so you're still getting that money.
What If the Credit Is Worth More Than You Owe?
There's no refund available for a solar tax credit. This means that you can't receive the same amount of money in cash, unfortunately. However, the credit does carry over.
If there's money left over, you can apply it to next year's taxes instead. The money won't go to waste. It will carry over for a maximum of five years.
Who Qualifies for The Solar Tax Credit?
So who (and what) qualifies for the solar tax credit?
Most people are able to qualify for the solar tax credit in 2023. To qualify, you have to own a solar panel system (in other words, if you rent a home that has solar panels that you didn't install, you don't qualify).
You must have taxable household income. If you're living off of your savings, you will not qualify.
The solar panel project has to be on a primary or secondary residence. You can't just install solar panels on countless rental properties to continue qualifying for the credit.
It can help with the costs of the panels (and related equipment) themselves, the labor from the solar companies, and the sales tax. If you're unsure as to whether or not something counts as part of the solar system cost, talk to a tax professional for more information.
When Does the Solar Tax Credit Expire?
The solar tax credit is set to expire in 2035 (though this may change in the future). It should stay at 30% until 2032 before dropping to 26% of installation costs in 2033.
This means that if you want to get the maximum amount of money, you should start planning your solar panel installation soon!
It's Time to Go Solar
Going solar isn't cheap, but it pays off. Not only can it lower your energy bills over time, but due to the solar tax credit, you'll be getting some money back.
Are you ready to go solar?
At Iowa Solar Pros, we help Iowa residents with their solar panel needs. Contact us for a free solar installation quote today.