What Is the Federal Investment Tax Credit?
Investment Tax Credit: Inflation is running rampant in 2024. In the first half of the year, inflation hit a 41-year high of 8.5%.
Life in the US is getting more expensive altogether. So one of the best things you can do is to make upgrades to your home that will permanently save you money.
That’s why now is the best time to install a residential solar system. Along with the monthly savings on your utility bill, there are a handful of solar incentives, like the federal investment tax credit, that make solar power more affordable than ever before.
So what is the federal solar tax credit, and how does it work to save you money? Keep reading below to find out how this single incentive can save you thousands of dollars.
Average Cost of Solar Power
Solar power isn’t cheap to install at a home, especially if you’d like to completely replace your electricity bill. The average cost of solar installation is anywhere from $13,000 to $17,000, depending on your state.
But this number is down considerably from solar installations of 10 years ago. As technology advances, and as the number of solar panels being manufactured multiplies, solar providers benefit from economies of scale.
This is driving the cost of solar power down to all-time lows. Still, this is a major expense that most homeowners don’t have the cash for. That’s why investment tax credits make such a big difference when deciding to go solar.
Save Money With the Federal Investment Tax Credit
Tax credits are the most important type of tax benefit. They reduce your tax burden dollar for dollar, unlike deductions which just reduce your taxable income.
And the federal government is rewarding homeowners (and businesses) who install solar power with the solar investment tax credit.
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If you install a new solar system in 2022, you’ll receive a 26% tax credit on your next tax return. That’s essentially a 26% discount on your solar panels, you just need to wait until tax time to claim it.
So if your solar installation cost is going to be $15,000, a 26% tax credit will put $3,900 back into your pocket.
However, if you wait until 2023 to install your solar system, you’ll only receive a 22% tax credit. And if you wait until 2024, you might not receive any tax credit at all, as the government plans to phase this program out.
However, they have extended it numerous times, so we’ll see if they decide to do so again.
Is Solar Power Worth It?
Most homeowners can expect ROI on their solar panels in 7-10 years. After the ROI period, you’ll experience monthly savings with a much lower electric bill, or no electric bill at all.
Going solar is worth it, especially if you get a 26% tax credit from the government.
Looking to get started as soon as possible? Check for licensed solar installers near you so you can get a quote and determine all the available local incentives.
Get Onboard With Solar Today
Solar power is the future of electricity. It will eventually be the future of the transportation industry as well.
The sooner you get on board, the sooner your system will pay itself back. And the more you’ll save with the federal investment tax credit.
Looking for more household tips, like this? Visit our blog now to keep reading.
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