2021, maybe your last Chance to Buy Solar Panels EVER!
Over the last decade, there has been a massive expansion of solar energy use among the United States citizens. Several factors have contributed to this, the obvious one being the Solar Investment Tax Credit program. While the tax program is the most lucrative incentive, it is getting much smaller every year.
Solar Investment Tax Program
So, what is the solar investment tax program? And why do we think that 2021 is your last chance to buy solar panels? To explain this, we will look to a scenario that most likely you have experienced if you live in the United States. You all know how solar panel companies have been running extensive and aggressive campaigns to market their products this season. Most likely, a solar panel salesperson has probably knocked on your door while making the marketing rounds. Well, this has happened to me several times in my neighborhood. Yes, I have received emails from three different companies concerning why I need to use solar energy.
If you have received them, you will agree with me that their pitch usually revolves around the big federal tax credit. Yes, the tax credit will eventually end, but is the claim that it will end at the end of the year 2020 a correct one?
Let us first see what solar Investment Tax Credit is. This tax credit is one of the United States Federal programs that aim to support the expansion of solar energy use in the region. The tax program started in 2006, and from then, solar energy use has expanded by more than 10,000. In the process, the expansion has led to the creation of employment opportunities. In 2015, the advocacy for a multi-year extension of the credit was successful. The extension was vital since it resulted in the expansion of the solar paneling business. The investor’s stability on how to value the credit started to decrease after 2019 despite its overwhelming popularity and success.
The Investment Tax Credit, which has been in the place for more than a decade, came to an end in 2019. However, it has been reducing gradually. In 2020, it reduced to 26%. According to the plan, it will decrease to 22% before the end of 2021. It does not mean that you will not be able to buy solar panels after 2021, but beyond 2021 you won’t be able to access Investment Tax Credit. The best thing is not to wait to get the latest return to investment for your solar panels investment. The sooner you start your investment, the better since the demand continues to grow as we get near the deadline, leading to backlogs installation.
Therefore, we can say that residential solar installers are not right to use this year’s deadline to register a sense of urgency with their customers as it has been happening this year. Don’t believe them if they approach you, saying that 2020 will be the end of tax offer or that you will not be able to buy solar panels after 2021. Both existing homes and new constructions will still have access to the federal credit next year; only it will be relatively smaller: 26 % of the purchase and the installation cost as opposed to the 2019 30%. For 2021, it will be 22% and zero percent beyond 2021.
Why you Need Renewable Energy Tax Credit
The tax credit is one of the most attractive ways of using solar paneling since it significantly cuts down the installation cost and roofing. For instance, a residential solar paneling system, an average-sized, costs about $18,000, according to the Solar Energy Industries Association. However, due to the tax credit, the tax reduces by $ 4, 680 dropping to $13, 320. Do you see the reason why you need to switch to solar energy as soon as possible?
However, prices are not static in all regions. They vary from one place to the other. Installations in some places are expensive compared to the others. But the tax credit remains constant in all areas.
Why you need Solar Energy before 2021
There are several reasons why installing solar panels is essential. Have you heard of global warming? Well, installing solar panels means that you would be switching from the use of fossil fuels. When fossil fuels decompose, they release dangerous greenhouse gases, which degrades the ozone layer resulting in global warming. Since it is the responsibility of every citizen to protect the world from global warming, switch from fossil energy to solar energy, only make sure that you do it early enough before 2021to get the tax investment credit.
A study by sense indicated that the United States’ home, on average, uses about $1,075 every year. The reason is a company that produces monitoring energy devices and sells to the United States. According to the study, the electricity generated by Utah residents is 84 percent of their utility bills. Still, Californian residents who rely on solar energy offset about 78% of their proposals.
Solar energy is the best means of preserving energy. It is also a clean source of energy. The best thing is that even if everyone gets connected to solar energy, the power will not depreciate. I mean, the sun cannot just disappear because everyone is using it. The best thing is that apart from installation cost, and some maintenance cost, you won’t pay monthly bills like it is the case with electricity. Even in less sunny North-eastern states of the United States, solar energy is still available. Several types of research indicate that the use of solar energy offset up to two-thirds of their bills. According to the Sense report, these areas get an efficient boost on energy since regions with lower temperatures have boosted solar production.
How to get Federal Tax Credit in 2021
There is a total tax that the IRS says that you must pay. Now you need to check the amount of tax that you have to pay. Then, you should subtract the credit amount from the total charge. You can choose any solar system installation that you wish since there is no limit on the price.
Some people think that this is the same as a tax deduction. However, it is very different. A tax deduction reduces the income that an individual pays on tax. For instance, if you have $100 credit, it is only worth $100 regardless of the tax rate. However, those people who fail to use their credit in one year are allowed to carry it forward into the latter years. What does this mean? If your taxes are $6,000 in 2020, then you are eligible for up to $7,000 credit on tax for installing solar panels in your house, then for the year 2021, you can claim $1, 000 credit leftover. However, it is essential to note that not all solar energy installation qualifies for a tax credit. It is advisable to check with IRS guidelines to see the solar panels that are covered. By so doing, you will be able to take advantage of the tax credit before its elapse at the end of 2021.