Hi, I saw your FAQs on the 30% tax credit for solar and still have a question. A solar company is quoting me over $63k for our system, so the 30% would be about $21k. But is there a CAP on the federal tax credit for solar? That install cost is high, and I’m not sure the $21k would even be real.
First of all, there is no CAP or LIMIT on the solar tax credit. The ITC is a one-time credit of 30% of the eligible solar investment. The solar tax credit, say $21K, in your case, can be used to adjust with the tax liability of the year in which your solar system is installed, or if the credit is more than your tax liability, it can be carried forward to the next year.
So, suppose you have a current tax liability and such tax liability you foresee to be in several years in the future. In that case, the solar tax credit is a golden opportunity because it serves three purposes:
- Saves your tax outgo
- Makes your house self-dependent as well as energy efficient
- Overall, it adds to the resolve of Govt. for clean energy
The solar tax credit will not increase your tax refund. Rather, The ITC amount is applied against your tax liability or the money you owe the IRS.
So, the solar salesman is telling you correctly, and even though the investment looks big, it is smart to invest in solar energy because of the huge tax advantage.
