The federal solar tax credit, also known as the investment tax credit (ITC), currently allows you to deduct 26 percent of the cost of installing a solar energy system from your federal taxes. The ITC applies to both residential and commercial systems, and there is no cap on its value.
On January 1, 2021, this solar tax credit will drop from 26 percent to to 22 percent of the cost of installing solar. For the average homeowner, that’s an additional $1,000 savings if they go solar by December 31, 2020.
With the pandemic having slowed global manufacturing, the solar equipment supply chain has been interrupted, with prices anticipated to increase 5-10 percent in 2021.
“More reason to go solar this year,” says Solarponics director, Frank Scotti. “People tend to want to wait, either for a better deal, better technology, or some other unknown future incentive. That’s just not going to happen. Prices are going up every day. The sooner you go solar, the more you save. Simple as that,” says Mr. Scotti.
It is unlikely that the federal solar tax credit will ever be more than it is now, either under the current administration, or under a new administration. Best case scenario is that we see the federal tax credit get locked in at 10 percent for both commercial and residential projects from 2022 and beyond.