27 Aug Solar Savings Alert: Time is Running out! The 26% Federal Tax Credit Is Dropping!
You may have found yourself putting your solar installation project off, or just keep thinking, “I’ll get around to it soon.” Here’s why that might not be in your best interest.
The government is essentially rewarding those of us who choose to “go green” by powering our homes or businesses with renewable energy, by giving us a large amount of that money back come tax season. Currently, the federal government allows owners of both residential AND commercial solar to reduce 26% of the overall cost of their system when taxes are filed with the IRS. There is no cap on the value of this federal reduction, meaning it benefits solar systems of all shapes and sizes.
Keep in mind, this money is YOUR money to begin with. In other words, you’ve paid taxes all year, and the federal government is giving you this incredible opportunity to recoup that money, helping to reduce the cost of your very own solar system. This may apply to any hardworking New York State homeowners or business owners who have been interested in going solar, to experience the incredible financial and environmental benefits for themselves.
The 26% federal solar tax credit is scheduled to drop to 22% in 2021 for both residential and commercial consumers, making 2020 a critical year for going solar to obtain the best incentive structure for your investment. Following this drop, future solar customers will continue to see additional drops with the federal tax credit in the coming years.
This 4% drop in 2021 may not seem like a huge amount; however, it can add up to hundreds if not thousands (and more) of potential lost savings.
As the Saying Goes . . . When it Rains, it Pours
NYSERDA is a New York State funded program that also helps make it possible for New York State residents to go green while lowering their electric bills. Currently they offer residents a solar incentive at 35¢ per watt, which helps even further reduce the cost of their system.
This current rate is actually an extension of a previous incentive. For the consumer, this means there is no set timeline for how long this incentive will last, or whether it’ll be reduced. The only guarantee is that homeowners have to take action ASAP to secure that incentive!
The Sunny News
There is an additional 25% solar income tax credit (with a $5,000 cap) offered through New York State, available to all residents who qualify. The great news is that there is no news yet that this will be reducing!
Let’s Do the Math
Let’s take an example of a Buffalo Solar Solutions residential customer. They have an average monthly electric bill of $150 and in this case, they would need an 10.00kW solar system.*
In 2020, if they qualified for the full 26% Federal Tax Credit it would be $7,332. As well as a 35¢ per watt NYSERDA rebate of $3,500.
Anticipating possible NYSERDA cuts, those same incentives would only be $6,204 and $2,000 come 2021.
Between both the federal and NYSERDA cuts, that’s a total LOST savings of $2,628 for the customer in this scenario – a whole lot of money that could be invested into other places of your life!
So . . . what are you waiting for??? Learn more about how to get started with solar panels.
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* Please note that in the example above the savings are based on a specific Buffalo Solar Solutions customer. Your numbers will differ based on many other factors, such as – your annual electrical usage, the current market value of products, shade, size and type of system, etc.
- In order to properly determine the correct system size and cost of a solar energy system, we need the annual usage from the electric bill and a complete site assessment must be performed.
- As a reminder, there is also the New York state solar tax credit for 25% (capped @ $5,000) that we take into account for estimated pricing of our systems.
- All financial benefits should be appraised and approved by an accountant.