Can You Claim the Solar Tax Credit Twice?
When you install a solar panel system, you can take advantage of the Federal Investment Tax Credit, also called the Solar Tax credit which allows you to deduct 26% of the cost of your solar installation from your federal taxes come tax time.
This credit offsets the cost of installing residential solar, but can you claim the solar tax credit twice? Our team at Solar Bear Orlando explains.
How Does the Solar Tax Credit Work?
You can claim the federal solar tax credit for money that you paid towards your solar installation. It reduces the amount that you owe when you file your yearly federal tax return.
The Solar Investment Tax Credit can be filed once for the tax year in which you install your system. The credit that you receive is calculated dollar-by-dollar as a reduction of your federal tax liability. So, if you have 1,200 credits, you will owe $1,200 less in taxes.
Take note: This tax credit is different from a tax refund. To claim the tax credit, you must owe taxes to the government. The tax credit essentially cancels out some or all the amount you owe. If you have already had those taxes deducted from your paycheck, you can get the money back in the form of a refund, but you are only getting back the money that you have already paid.
Solar Tax Credit Eligibility Requirements
The Solar Tax Credit is only available for property owners in the United States whose solar installations meet the specified requirements in the policy. Here are some of the mandatory conditions that your system needs to satisfy to be eligible:
- The solar system should be brand new and should have been installed no earlier than January 1st, 2006, and no later than December 31st, 2023. Unless Congress renews it, the Solar Tax Credit will expire in 2024.
- The system must be owned by you and not leased.
- The property must be in the United States
- For residential solar installations, the location of the system must be at your primary or secondary residence or a community solar project.
The Value of the Solar Tax Credit
As of 2022, the Solar Tax Credit is 26%. When the tax credit was first introduced it covered 30% of the cost of installing a solar system. It remained at that rate until 2019.
In 2015, Congress voted to phase out the tax credit, and beginning in 2020, the tax credit was reduced from 30% to 26%. The rate was scheduled to drop from 26% to 22% in 2021. But when the COVID relief bill passed, it included a two-year extension of the Solar Tax Credit.
The 26% rate is available for the rest of 2022 and will drop to 22% in 2023. In 2024, the federal tax credit is supposed to expire unless it is renewed.
- 26%: Solar systems that are completed in 2022
- 22%: Solar systems that are completed in 2023
- 0% Solar systems that are completed in 2024 and beyond
There is a chance that Congress could vote to extend the Solar Tax Credit, but for now, we recommend that if you are interested in installing solar, you should have it done as soon as possible so you can take advantage of the solar tax credit.
Can You Claim the Solar Tax Credit Twice?
Now, the answer that you have been waiting for. You can only claim the Solar Tax Credit once for your solar panel installation. However, you can roll over any leftover tax credit balance to the following year for up to five years. And if you own more than one home, you may be able to claim separate tax credits for solar installations on those homes.
We advise you to speak to a tax professional about any specific Solar Tax Credit questions, as every situation is unique.
Learn More> Why Florida is the Perfect Place to Switch to Solar
Solar Bear Orlando
If you are ready to take advantage of the Solar Tax Credit before it expires in 2024, call our team at Solar Bear Orlando for expert solar installations throughout Central Florida and the Greater Orlando area.
Go Solar today! Call Solar Bear for an installation quote; (727) 471-7442!