One of the most common questions that prospective solar customers have is what a solar tax credit means and how can it benefit you as a homeowner?
This is extremely important when considering solar, not only because this will cut your total cost for the project but also because it may be a bit confusing in terms of whether or not you can benefit from this tax credit and how you can benefit from this tax credit.
So let's start at square one. What is a tax credit? For that we will include a link to the IRS site explaining the difference between tax deductions and tax credits.
To put it in one sentence, a tax credit is the ability to reduce your tax liability dollar for dollar. Now for some examples:
Let's say at the end of the year you owe the IRS $5,000, and you have a tax credit of $5,000 - well you're in luck - you now owe the IRS $0.
Now let's say you got $5,000 in federal income taxes taken out of your paychecks for a year, and you have a tax credit of $5,000 - the IRS will then send you a check for $5,000. Happy day indeed.
To put it simply - a tax credit is a huge benefit for anyone looking to purchase solar panels.
So now that you understand what a tax credit is, it'll be easy to understand what a solar tax credit means. Simply put, the solar tax credit is equal to 30% of the cost of the solar system purchased. So, if you purchase a $20k system, you will receive a $6,000 tax credit, and your net cost for the system would be $14k.
Without any doubt this is the biggest incentive to purchase solar, and the ability to cut your cost by 30% means that your payoff goes down dramatically.
For more information, make sure and contact us to receive a free quote and see how you can take advantage of this great government incentive.