With the increase in green technology and awareness about climate change, it’s no surprise that the general enthusiasm for solar power in homes and businesses is on the rise. According to the Solar Energy Industries Association (SEIA®), solar energy has ranked either first or second in energy capacity added to the U.S. for the past 7 years. In fact, 40% of all new electricity added to the grid in 2019 was from solar energy! A big push for solar energy comes from the savings on the environmental impact and the savings on energy bills. Growth can also be attributed to new solar array owners taking advantage of the Solar Investment Tax Credit (SITC).
In 2020, the Solar Investment Tax Credit (SITC) offered by the Federal Government was 26%. This was set to decrease to 22% in 2021, but after recent legislation, a federal spending package was passed to extend the 26% tax credit for two additional years! This is a huge step for residential and commercial solar projects in the U.S..
Keep reading to learn more about the solar investment tax credit.
What is the Solar Investment Tax Credit (SITC)?
The SITC is an important policy from the federal government that has helped solar energy expand in homes and businesses across the U.S. The 2021 credit allows people to offset 26% of their solar installation from their federal taxes, if they qualify.
This benefit helps homeowners make the shift toward solar power. The credit also helps businesses make an investment to drive competition and technology forward so their customers can get the best service and products possible.
The Scale-Back Plan for the Solar Investment Tax Credit
As you can imagine, there has been a debate for and against the SITC. Since legislation passed through Congress in 2015, the credit has been available for business and homeowners through 2022. The tax credit is scheduled to scale back after 2022, however members of congress are debating extending it beyond this. If you qualify, the plan is as follows:
- 2021-2022: New solar power systems can apply to deduct 26% of the installation cost
- 2023: Commercial and residential solar projects can receive a 22% tax credit
- 2024 and the future: New solar power systems for commercial owners can deduct 10% of the installation cost – NO federal tax credit for residential customers
- As with all tax issues, ensure you consult your tax professional to see if you qualify
A Strong Outlook for Solar Energy in Michigan
In addition to a growing number of commercial and residential customers going solar, the future of solar power in Michigan looks bright! In December 2020, Consumers Energy announced a 12% electricity rate increase effective January 1, 2021 and DTE will likely follow suite. While this outlook is grim, the rate increase benefits the solar industry as more people will go solar to save on their electricity bills and receive a higher return on investment from their array.
Learn More About the Solar Tax Credit
A great way you can gain the benefits of solar energy and take advantage of the Solar Tax Credit is by working with a professional and local installation company like Michigan Solar Solutions. We have been in business for over 13 years, providing our customers with affordable options to reduce their environmental impact while saving money on their energy costs.
Contact us to learn more about your solar options.
If you or another business is interested in having an undeniable impact on your triple bottom line give us a call for a free consultation to see if solar is right for you! Call (248) 923-3456 or request a Free Online Solar Analysis for Your Business.
Michigan Solar Solutions is a commercial and residential solar installer and electrical contractor that has served the lower peninsula of Michigan since 2007. We have installed thousands of panels and have a happy customer near you, check out what our customers think of us on Guild Quality.