The Solar Investment Tax Credit (ITC) is a government federal tax credit where you can lower the price of your solar energy system by 30%.
For example, if the gross system cost of your system is twenty thousand dollars, your tax credit would reduce your PV system cost by thirty percent, or six thousand dollars, making your net system cost fourteen thousand dollars.
The 30% tax credit has been extended until through 2019, after which it steps down one level to 26% in 2020 and then 22% by the end of 2021.
To claim this tax credit, you need to purchase your system, either with a cash purchase or a financed loan. If you install your system with a lease, your solar leasing company will receive the tax credit.
In addition, you must have a tax liability that is greater than or equal to 30% of your system cost to be able to claim the Solar Investment Tax Credit in a single year. However, you can claim portions of the tax credit over 5 years if your tax liability isn’t as large as 30% of your system cost.
Not only does the tax credit apply towards the cost of your solar system, it also applies to any other work you need done to go solar. This means if you need to re-roof or upgrade a panel box, you are eligible to claim the 30% tax credit on the cost of the panel box or the portion of the roof that has solar on it.