It’s no secret that solar panels have skyrocketed in popularity in recent years. In fact, by 2030, experts believe that the number of Americans using solar panels will more than triple.
If you’ve been considering this investment, you may be curious about the financial nuances of your decision. After all, solar panels represent a hefty investment—so what can you do to offset the cost? The government’s tax credits have made news in the past, but what kinds of solar panel savings can you see in 2021?
Let’s take a look at the current financial incentives for solar panel installation, and how to take advantage of them.
Can You Still Get Tax Breaks for Solar Panels in 2021?
If you’re looking for U.S. government tax credits for residential solar panels, you’re still in luck. Though the tax breaks for solar panels saw their heyday in the mid 2000s, the current tax credits are nothing to sneeze at—and they’ve been extended through 2022 at 26%.
How Do the Federal Solar Tax Credits Work?
Homeowners sometimes grow confused by the language surrounding these tax credits and believe them to be tax deductions. However, the tax credits don’t deduct money from your gross income. Instead, they go toward the federal taxes you owe for the year.
In essence, if you purchase solar panels for your home, these tax credits work like a prepaid gift card! This can help balance out the high initial solar panel costs before you see long-term savings.
What Are the Requirements for Getting These Solar Panel Savings?
Any U.S. home- or business owner is eligible for solar energy savings. All you need to do is start your solar panel installation by December 31, 2022 and finish the project by the end of 2023. The solar panels you use must be new, not a system that was installed or used before.
Note that the tax credits do not extend to solar panels you’re leasing. You must own them outright, though it’s acceptable to pay for them with financing.
In general, of course, it’s a good idea to seek professional tax advice to ensure that you meet all requirements. A tax advisor can also help you direct any questions to the IRS and assist with the next step.
How Much Can Solar Panels Save You?
Though the initial solar power costs for the purchase may seem high, the best solar panels can be a great investment. In addition to the federal tax credits, solar panels can keep more money in your pocket in the long term, and proper installation can help them last decades.
Depending on your home’s location and your energy use, you could recoup your initial investment in around 12 years, meaning that all future energy costs are low!
Take Advantage of Solar Savings
If you’ve been on the fence about solar panels, now is the perfect time to take the plunge. The federal government’s solar panel savings won’t last forever, so be sure to arrange the installation of your new solar system before the tax incentives are gone!
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