Freedom and the Federal Tax Credit … which one is going away?

Energy freedom… that’s what solar is.  Americans are empowered to choose how and when they get their electricity for their homes and businesses. A major benefit to solar freedom and ownership is the 30% Investment Tax Credit (ITC), also referred to as the federal tax credit.

The full value of the ITC is earned immediately and applied to tax year that the solar system is installed. (It has a 5 year compliance period.) This dollar for dollar deduction is determined by the net total cost of the solar system, which includes the solar panels, inverters, mounts, wiring and installation costs.* Homeowners of solar systems that are leased (PPAs) are not eligible for the ITC, the third party financier benefits.

The ITC applies to owners of homes and businesses who install their solar systems on or prior to December 31, 2016, after that, it’s gone for homeowners.

The Energy Policy Act of 2005 created the 30% ITC for solar systems and began January 1, 2006 which has helped keep the cost of solar affordable. However, when we reach the deadline in December 2016, the commercial solar credit will drop to 10% and the residential solar credit goes to 0%… unless congress extends the deadline (or changes the law for the “placed in service” component to a “commence construction” provision.)  To date, the ITC has been applied to hundreds of megawatts of photovoltaic solar energy installed throughout the nation.

The California Solar Energy Industries Association (CALSEIA) is actively pursuing congress to extend the ITC deadline. CALSEIA advocates for the solar industry at our Capitol in Sacramento and the California Public Utilities Commission (CPUC) in San Francisco.  CALSEIA is committed to the continued growth of the entire solar industry in California.  They are on the forefront of defending net energy metering (NEM), creating new incentive programs and even streamlining local permitting process.  As a thought leader and community advocate, Clean Solar CEO, Randy Zechman, has been the Bay Area Chapter CALSEIA president for the last 2 years.

Renewable energy tax policies, like the ITC, play a vital role in lowering electricity bills for residents and businesses, stimulating and creating job and economic growth, as well as reducing pollution.  In 2005, there were 15,000 new jobs in solar.  Today, there are over 174,000 new solar jobs nationwide, employed by 8,000 companies, many of which are small, local businesses like Clean Solar.

CALSEIA and InterSolar have created a video to educate members of congress on the importance of the ITC while rallying grass roots support. Intersolar, being held this week in San Francisco, is a solar industry exhibition focusing on increasing the amount of solar power in our energy supply. This link will take you to the CALSEIA Facebook page to watch their 3 minute video.

So enjoy your freedom… and let your voice be heard.

*Please note that all data provided was for informational purposes only. Clean Solar cannot guarantee a specific tax credit amount and recommend all solar clients speak with a tax professional to determine your actually ITC tax benefits.