Note: the information in this article is now out of date. Updated info coming soon.
Does the Pain of Tax Season Linger? Take Advantage of the Solar Investment Tax Credit (ITC) this Year!
Whether it’s cutting electric costs, energy independence or lowering their environmental impact, solar is a great investment for long-term homeowners looking to make a difference. Although solar may seem like a big investment at first glance, the incentives offered through the Investment Tax Credit (ITC) can have a major impact on net cost of your array.
What is the Investment Tax Credit (ITC)?
The ITC is a federal policy mechanism that incentivizes homeowners, farms, and commercial businesses, to install solar panel systems and other. The ITC is a dollar-for-dollar offset of tax liability. It is not a check from the government. It’s not a rebate. It is a credit against tax liability and a powerful way to defray tax owed. It’s very popular and a big motivator for many to go solar.
For residential installations, the ITC is applied in the year a system is “placed in service” which means it must be operational before December 31. For commercial installations, the solar panel installation must at least commence construction in the tax year of interest. This older blog post provides additional detail and overview on how to apply for the tax credit.
Time is Ticking Away…Take Action Today!
Don’t wait! In 2022 the tax credit remains at 26% but in tax year 2023 the ITC drops to 22% and then drops to 10% for commercial and 0% for residential. Planning and budgeting for a solar installation can take some time. Once a decision is made, it can also take several weeks up to 2 months to get utility interconnection and local permit approvals. Start now and don’t wait. If you wait to start in the fall, if you’re a residential consumer it may be too late to get your system installed and placed in service before the new year.
Keep in mind, in addition to the ITC, there are other great solar incentives as well. In Illinois, the Solar Renewable Energy Credit (SREC) is another financial incentive. See our residential solar incentives and commercial solar incentives pages for more details.
With the ITC set to drop year after year, now is the optimal time to consider installing a solar array. In the past, lawmakers have extended to ITC because of its positive impact on the solar industry. However, there is no guarantee this incentive will last forever. As with any major purchase, it is important to do research and determine if solar is something to seriously consider. We encourage you to consult with a seasoned tax professional that is versed in the solar investment tax credit as well.
If you have any questions about the ITC or solar in general, feel free to call Tick Tock Energy at 217-994-9020 or email us at [email protected]create new email to talk with one of our representatives today!
* NOTE: Tick Tock Energy are not tax professionals. We encourage you to consult your CPA or qualified tax advisor to fully explore how solar tax incentives can apply in your situation. Tick Tock can quote your solar project and help estimate tax incentives but verifying their applicability and benefit is up to you and your tax professional. We’re happy to assist along the way!