Solar Federal Tax Credit Decline

Solar Federal Tax Credit Decline

“You Could Lose Upwards of $1,000”

Depending on the size of your solar system, you could lose upwards of $1,000 when the 30% Solar Federal Tax Credit steps down to 26% next year. Here are some numbers to think about:

If you haven’t heard already, the highly lauded 30% solar Investment Tax Credit (ITC) is scheduled to go down 4% at the end of this year. For some, this could mean a substantial difference in their return on investment. As you can see in the above chart, a $30,000 solar project will receive $1,200 MORE in 2019 on their tax credit, than in 2020. Even a smaller $25k system gets $1,000 more this year than next. 

Obviously this 4% decline will not deter all potential solar customers, but it has created some urgency amongst home and business owners. Imagine you were doing a half million dollar solar project on your manufacturing facility, you could lose $20,000 in tax credits because you waited for the ball to drop.

The above chart depicts the scheduled step down of the Tax Credit over the next four years. As you can see, things start to look bleak rather quickly. By 2023 there is no residential tax credit, and the commercial tax credit is only 10%.

We hear a lot of homeowners say things like, “I still have a few years left on my roof, so I’m going to wait a few years.” Well, see for yourself. If you wait, you will get a smaller tax credit, or if you wait too long, nothing at all.

Others say, “the price of solar will drop and levelize the ROI.” But let’s be realistic, that is beyond wishful thinking. Industry pricing does not drop 4% per year, and definitely not 30% in four years. In fact, since the solar tariffs went into place last year, solar pricing has increased. So hoping for cheaper solar is probably not a safe bet. 

Can I still Qualify for the 2019 Tax Credit?

Yes, if you can meet the following criteria: If we can start construction of your solar project in 2019 and you pay at least 5% of your project cost. Then your system will be applicable for the 30% Federal Tax Credit.

This is Cash

The last thing to remember is that this is real cash we are talking about. That being said, here’s a GIANT disclaimer. We are not accountants here at Rayah Solar, so we can not and do not offer tax advice. But with that said, the Federal ITC is a tax “credit.” This is very different than a deduction (for specifics, please consult a certified public accountant). In layman’s terms, tax credit means that if you were to get a refund on your taxes, you would now get your refund plus the solar tax credit. 

Example: You are supposed to get a $1,000 refund on your taxes. Then you decide to  install a system that costs $30,000. You you would receive $10,000 (your refund with an additional $9,000)!  

There is Hope: We’ve been telling homeowners for years not to wait to go solar, and sounding a bit like Chicken Little in the process. But the truth is that for solar, the sky of government incentives and soaring ROI really is falling. But there’s still time! You can still get in on the savings. Give us a call today and beat the clock.

For more information, CALL or TEXT us at 617-564-3159



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