You may have been hearing a lot about the Solar Incentive Tax Credit (ITC) during your solar investment New Jersey process, but you might be unsure about just how it works. The ITC, in short, lets you deduct a maximum of 30% of the price of your solar energy unit off your federal taxes. This is one of the primary advantages of financing a solar energy system—as opposed to signing a PPA or lease where you wouldn’t receive this profitable tax credit.
The Investment Tax Credit is dependent upon the overall amount you’ve invested in your solar system—with leases worth up to 30%. The 30% tax incentive is currently active through December 31, 2019, falling to 26% in 2020 and 22% for 2021. Beginning after 2021, the value of credits will reduce to zero.
Keep in mind that this blog doesn’t provide tax advice. Make sure to consult with a tax advisor when any tax-related questions come up.
Are You Qualified for the Solar ITC?
In order to be qualified for this tax credit, you have to own your solar energy system—PPAs and leases aren’t eligible. Construction has to start on the project before December 31st, 2019 to be qualified for the 30% tax credit as well. You also need to own your home. Do not fret If you do not happen to have sufficient tax liability to receive the entire credit for the year you’re filing for. You’re able to roll over the unused credits for the coming years—as long as your tax credit is still applicable.
Filing for the Solar ITC
This tax credit is easy to file for—just make sure your claim the ITC as you’re doing your federal taxes or when you utilize an accountant, make sure you communicate that you installed solar panels. This way they can be sure that you obtain this credit. The filing process includes completing IRS Form 5695.