What is the process for the federal solar tax credit?

You are qualified for the solar investment tax credit as long as you are the owner of your solar energy system (that is, whether you paid for it outright with cash or financed it with a solar loan)! For as long as the tax credit is in existence - through 2023 for homes and 2024 for commercial systems - you can "roll over" the remaining credits into future years even if you don't have enough tax liabilities to claim the entire credit in one year. Solar owners in all tax brackets are eligible for the ITC because it has no income restrictions and can be paired with state and local incentives to increase your solar savings!

Levels of solar incentives

A number of state and municipal incentives exist in addition to the federal solar tax credit that can increase the value of adopting solar. Between 26 and 50 percent of the cost of adopting solar can be offset by rebates, tax advantages, and other incentives. Here is a brief overview of the alternatives that may be available to you based on your location:

State tax credits

Similar to the ITC, except for your state taxes, several states offer a tax credit that works essentially in the same way. When combined with the ITC, the proportion you are eligible to write off varies from state to state but can have a substantial impact on the overall cost of going solar.

Cash rebates

To jumpstart solar installations in a region, cash rebates from the state, cities/towns, or utility providers are frequently given. They normally last for a short period of time or until a set amount of solar energy has been put in an area, but they can lower the cost of your solar installation by anywhere between 10% and 20%.

Solar renewable energy certificates

SRECs, or solar renewable energy certificates, are performance-based solar incentives that let you profit more from the production of solar electricity. You can earn one SREC for each megawatt hour (MWh), or 1,000 kilowatt hours (kWh), of electricity your solar panel system produces, albeit they are not accessible in every state.

Performance-based incentives

A performance-based incentive (PBI) is a type of incentive program that gives you a credit for each kilowatt-hour of electricity your solar system generates. PBI schemes differ slightly from SREC programs in one important respect: instead of offering incentives for the power generated itself, SRECs represent the environmental benefits of solar generation (i.e., emission reductions) (i.e., the kilowatt-hours of production). PBI incentive rates are chosen at system installation. Depending on where you reside, PBIs may either be used in place of or in addition to net metering regulations.