A Look at the Declining Investment Tax Credit for 2019 and Beyond
For years now, "solar power" has been and continues to be one of the most talked-about, eco-friendly buzzwords. Harnessing the power of the sun with solar installation is an enormous part of the country's gradual turn towards energy independence and our Long Island solar power company has been at the forefront of this movement.
A crucial part of that movement over the last ten-plus years has been a government initiative called the solar Investment Tax Credit, or ITC. This is one of the government's most significant policies enacted to promote the growth and use of solar energy across the U.S.A. Since the ITC came into existence in 2006, the tax break provided has spurned on a massive growth of the solar industry, expanding by more than 10,000%, creating hundreds of thousands of jobs, and putting back billions into the United States economy.
However, the solar Investment Tax Credit faces an uncertain future. Regardless of its massive popularity and success, the credit will start decreasing after the end of the year 2019 unless newly-proposed legislation is passed to extend the tax credit another five years at its full 30 percent value.
So, what exactly is this tax credit? How will it affect you? How can you take advantage of this helpful tax credit now? We’re here to help!
There are plenty of questions around the Investment Tax Credit. Let's dive into them here.
What is the Solar Investment Tax Credit?
Let's back up a bit and explore the idea of a tax credit. Put simply, a tax credit is just a dollar-for-dollar reduction in the taxes that a person or business would send to the government come April 15. The Investment Tax Credit comes into play based on the amount a person or company invests in solar property; currently, the credit sits at 30 percent claimed against the tax liability of residential and commercial/utility investors in solar energy property. The qualification and benefits received from the ITC rest upon a simple "commence construction" standard.
This significant tax credit prompted individuals and businesses to spend their money investing in solar power and as a result, the ITC helped create a stronger, cleaner economy that drives down costs for businesses and homeownership. It proved so popular that Congress passed a multi-year extension of the ITC in 2015, providing market assurance for organizations to generate long-term investments to encourage competition and innovation - in turn, lowering energy costs for consumers. In a follow-up, the IRS issued guidance in June of 2018 explaining the prerequisites taxpayers need to meet in order to claim the ITC.
Changes to the ITC
As we mentioned earlier, the ITC will be changing - unless the legislation keeping the investment at its current value is passed. As it stands now, the percentage tax credit delivered by the ITC will decline over the next two years:
down to 26 percent for constructions that begins in 2020
down to 22 percent for constructions that begins in 2021
down to zero percent for residential credit and 10 percent for commercial credit after the year 2021
There are some important caveats to those percentages that consumers should be aware of as well. Commercial and utility-scale projects that start construction before December 31, 2021, may still qualify for some ITC portion if placed in service before December 31, 2023.
Don't Wait - Get Solar Today
With the future of the tax credits provided by solar power murky at best, it's important now, more than ever, to take advantage of the remarkable savings and benefits that solar energy can offer your home or business. The long-term investment in solar power provides an unparalleled return, and home and business owners should jump at the chance to claim the 30% tax credit before it slips down to 26%, 22%, or eventually, absolute zero.
How can you take advantage of this solar power credit right away? Get in contact with us, Long Island’s premier solar power company, GreenLogic. Since 2005, we’ve helped Long Island residence and businesses save millions on their energy bills, providing unmatched quality, reliability, and high levels of performance. Our talented team of energy consultants, designers, installers, and customer service representatives are experienced, ready, and committed to helping you make the switch to solar.
Interested in seeing how you can take advantage of the Investment Tax Credit today?
Contact us at (631) 771-5152 or email firstname.lastname@example.org to get started!