Update: As of 28 December 2020, the stimulus bill has been signed. The federal tax credit for solar will remain at 26% through the end of 2022 unless Congress extends it again.
The 26% federal tax credit for solar power, also known as the Investment Tax Credit (ITC) has been extended for two more years. The ITC was originally going to be reduced to 22% in 2021 and was going to phase out entirely for residential solar power in 2022. But thanks to efforts by the Solar Energy Industries Association, Congress chose to extend the ITC and provide funding that will accelerate the integration of solar power into the nation’s energy mix.
Go solar before 2023 to receive the 26% tax credit
To be eligible for the full 26% ITC, you must have begun construction of your solar system or have installed home batteries by the end of 2022. If you’ve already gone solar and have already collected the ITC, you may be eligible to get it again if you add home batteries to your existing solar system. Keep in mind that you must have paid income tax to collect anything from the ITC. The ITC is an income tax refund. You can deduct the ITC from your income tax up to five years after you file for it. Thus if you filed for the ITC this year, you would be able to deduct it from the income tax that you owe up to 2025. The ITC will be reduced to 22% in 2023, and it will phase out entirely for homeowners in 2024.
You should contact a qualified tax expert and consult with them. Neither Freedom Forever’s family of independent authorized dealers nor Freedom Forever itself can give you tax advice. A qualified tax professional will understand your situation and be able to give you the most relevant advice.
Renewable research gets a boost
Along with the ITC extension, research projects intended to improve solar panel efficiency and solar energy storage systems received millions in needed funding. The bill included appropriations for the Department of Energy to develop more efficient solar panels and to facilitate the recycling of worn-out panels. Funding was also provided to help develop a newly created Energy Storage System Research, Development, and Deployment Program at the Department of Energy. This program is intended to speed the development of home batteries and other systems used to store the electricity generated by solar power.
The Solar Energy Industries Association looks to boost solar power in 2021 and beyond
The ITC extension happened thanks to advocacy efforts by the Solar Energy Industries Association (SEIA). The SEIA plans to aggressively promote legislation to promote solar energy in the next Congress. Freedom Forever is a member of the SEIA and we support the vital work the organization is doing to make solar an important part of the nation’s transition to renewable energy sources. According to Abigal Ross-Harper, the President and CEO of the SEIA, This recent legislation is a ‘down payment on a much more aggressive clean energy and climate policy that advances the solar economy and promises environmental justice.’ The organization plans to promote tax equity financing for solar projects and a tax credit for stand-alone storage.
There has never been a better time to go solar
Thanks to the ITC extension there has never been a better time to go solar. The cost of going solar and the cost of home batteries has dropped significantly in recent years. Freedom Forever and our family of independent authorized dealers will help you get the most out of going solar or adding batteries to your solar system. Then you can look forward to years of savings on what you’ve been paying for electricity.