The “Residential Renewable Energy Tax Credit” is a Federal income tax credit available worth 26% of the total cost of a solar array or home battery storage solution tied to a solar array. This is available for solar or batteries installed for primary and secondary residences. For a Solaflect PV Tracker, this is worth anywhere from about $5,500 to $7,500 depending on the Tracker purchased. The tax credit will be 26% through the end of 2020, after which it steps down to 22% through 2021, and is then scheduled to be eliminated.
Tax credits are different from tax deductions. To use a tax credit, you first calculate how much tax you owe for the year. Then, instead of paying that amount of tax, you apply the tax credit as “payment” instead. That means that the tax credit has full face value, unlike deductions.
If you have already paid taxes over the year through withholding, then applying the tax credit can translate into a larger refund. However, the solar tax credit is non-refundable. That means that if you owe less in Federal income taxes for the year than the size of the credit, you will not receive the difference as a refund. Instead, you can carry forward any unused portion of the tax credit to the next year’s taxes.
Please note that Solaflect cannot and does not give tax advice, so it’s important to consult with a tax professional who can review the specifics of your situation.
We love talking about all things related to solar, so please reach out to us or call us at (802) 649-3700 if we can answer questions and help you think about how solar can cover an ever-increasing share of your family’s power usage!