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It's Tax Day - what's that got to do with residential solar?

04/15/19

  11:24:00 pm, by Jim Jenal - Founder & CEO   , 430 words  
Categories: Solar Tax Incentives, Residential Solar

It's Tax Day - what's that got to do with residential solar?

Tax day!At the risk of being the bearer of bad tidings, today is Tax Day!  So—apart from really bringing you down—what has that got to do with installing solar on your home?  Well here’s the thing, for quite some time now, solar installations have enjoyed a 30% federal tax credit that can be stretched out over 20 years.  Indeed, with the demise of all of the local, utility-provided rebates, the federal tax credit has been the last incentive standing.  But guess what—it too is scheduled to go away.  Here’s what you need to know…

For some folks the thought of going solar now is leavened by the belief that something much better will be coming soon.  But aside from the very real opportunity cost that arises from delaying that solar install, there are now imminent tax consequences to consider.  In particular, here is the schedule of declines to the federal tax credit for solar:

  • Now until December 31, 2019 - the full value of 30% on the cost of the system.
  • January 1, 2020 through December 31, 2020 - 26%.
  • January 1, 2021 through December 31, 2021 - 22%.
  • January 1, 2022 - ZERO!

So over the next two years a relatively gentle step down (though 4% on a $25,000 project is still $1,000 you would be leaving on the table) each year, but then it falls off a cliff as the credit goes away entirely!

Moreover, it is important to note that the credit is only available for projects that are “put in service” in the associated calendar year; which for all intents and purposes for residential projects, that means that you have received Permission to Operate from your utility.  And that is where the real issues arise.  We have seen this before—whenever a major incentive is scheduled to decrease (or go away entirely), there is a last-minute rush to get projects installed and PTO issued.  But utilities operate on their own timelines, and as the number of projects pending increases, so does the amount of time that it takes to get approved.

For potential Run on Sun clients, you should know that we will be issuing a cutoff later in the year beyond which time we will not be able to guarantee that you receive PTO this year.  That will be a function of both our pipeline, and more importantly, the pipeline for approval at the various AHJ’s and utilities in our service area.  Watch this space for updates.

Bottom line—if you are seriously considering going solar this year, and capturing that full 30% federal tax credit, Do Not Wait!  Give us a call, get into the queue early, and rest easy, knowing that next year, Tax Day will be a whole lot sweeter!

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Jim Jenal is the Founder & CEO of Run on Sun, Pasadena's premier installer and integrator of top-of-the-line solar power installations.
Run on Sun also offers solar consulting services, working with consumers, utilities, and municipalities to help them make solar power affordable and reliable.

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