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HISTORY OF SOLAR ITC
Originally established by the Energy Policy Act of 2005, the 26% ITC (Investment Tax Credit) has been a success in supporting the country’s transition to renewable energy. The 2020 spending bill has extended the solar ITC at its current level of 26% for two additional years, through the end of 2022.
HOW DOES IT WORK?
The minute you own a solar system, whether it is residential or commercial, you are eligible for this Federal Tax Credit. The 26% tax credit means that as a residential or commercial client, you can claim 26% of the cost of the system through federal taxes. This can be claimed when you file for your yearly federal tax return. You can receive 26% for systems commencing construction in 2020-2022, 22% for systems commencing construction in 2023, and 10% for systems commencing construction in 2024 or thereafter. Systems placed in service after 2025, regardless of when they commenced construction, can receive a maximum tax credit of 10%.
In 2021, owners of new residential and commercial solar can deduct 26% of the cost of their system.
In 2023, owners of new residential and commercial solar can deduct 22% of the cost of their system.
In 2023 and beyond, the residential credit drops to zero while the commercial credit drops to a permanent 10%. Commercial and utility-scale projects placed in service before January 1, 2026, may still qualify for the 26% or 22%.
For more information on ITC, click here.
About the Author
Tara represents EmPower Solar as the Chair of the Long Island Solar & Storage Alliance where she is the government liaison for policy issues related to solar and energy storage. In 2018, Tara was named one of the Top 50 Women in Business by the Long Island Business News. She was also inducted into the Social Justice Distinguished Scholar Academy for her work in environmental justice issues in collaboration with Farmingdale State College.