Solar Tax Credits

Can You Benefit from Solar Tax Credits?

Solar energy has taken a long time to catch on, both among the general public and among politicians. While the technology has been around for over a hundred years, and while the technology has been feasible for individual consumers for decades, it has only begun to reach widespread acceptance over the last 5 to 10 years. Part of this is due to changing attitudes among the public, but part of this is also due to politicians finally beginning to incentivize the technology with solar tax credits and the like.

Making Solar Panels Affordable

While the electricity produced by solar panels is free, buying the panels themselves are not particularly cheap and never have been. They are precisely manufactured utilizing high-end equipment, materials and manufacturing spaces- all of which are costly. While the technology and the process of producing the solar cells and panels that produce solar energy have continued to increase in efficiency and availability, the price of enough solar panels to power a house is higher than most could afford.

>>Click here for a guide to reducing solar costs<<

Rising demand and increasing manufacturing efficiency have not been enough to start to reach critical mass with the technology, which is why politicians over the last few years have begun to create incentives for individuals to purchase their own solar panels with solar tax credits. Combined with the other factors creating lowered costs, solar tax credits are a big reason why solar panels are affordable for individuals and businesses these days. You can find out more about the savings from solar power here.

What are Solar Tax Credits?

Solar tax credits cover a variety of solar energy systems, as they provide incentives for both solar water heaters and for solar panels (home PV systems). The actual nature of the tax credit and what you can expect to save varies depending on what you aim to construct for your home.

For a solar water heater to qualify for the tax credit, your heater only needs to produce over 50% of its energy from solar sources. It has to pass Solar Rating certification and it only applies to water that is heated for your home itself. So while there are solar energy systems for heating swimming pools, hot tubs and the like, these solar tax credits only apply to hot water tanks for internal residential use. The tax credits given will factor in both materials and installation costs.

Solar panel systems for your home also receive significant tax credits. Similar to the strictures for the solar water heaters, tax credits will only be given for electricity which is generated for use within your home, and it must pass all certifications and codes set up by the relevant national and state organizations.

Overall, the best way to determine whether the solar energy project you have in mind meets the criteria necessary to receive solar tax credits is to read and fill out the application forms relevant to your projects. As a whole, these tax credits are certainly worth pursuing as they provide a credit that reaches up to 30% of associated costs with no maximum as to how much you are able to be credited. This makes projects like Earth4Energy and GreenDIYenergy all the more attractive.

More information can be found on the Energy Star website.