The price of a Shade Power solar pergola, solar carport, or ground-mount solar energy system is brought down significantly thanks to a federal incentive that allows taxpayers to claim a 30% credit on the expense of solar energy and battery backup installations through the end of 2032. A tax credit is a reduction in the income taxes that a person or company would otherwise pay the federal government. This means that the full cost of the solar energy system has to be paid for upfront, but you will receive a credit when you go to pay your taxes the following year. If the federal solar tax credit, also known as the investment tax credit (ITC), exceeds your tax liability, the excess amount is able to be carried forward to the next taxable year. The ITC is available to all homeowners and there is no cap on the amount. 

While the federal tax credit had decreased in 2020 and 2021 and was set to to expire, fortunately it was renewed and extended for installations between 2022-2032 as part of the Inflation Reduction Act of 2022. You will claim the solar tax credit when you file your yearly federal tax return so don’t forget to let your accountant know you have purchased a solar energy system in the past year. 

The federal solar tax credit makes investing in a solar pergola or ground-mount solar energy system much more financially favorable for the homeowner. It effectively decreases the cost of the installation by 30% through the end of 2032. By decreasing the cost, it means your installation will pay for itself that much faster. After that, all of the electricity savings just mean more money in your pocket as a homeowner or business owner. So, if you are thinking about investing in solar, now is the time to act in order to take advantage of the federal solar tax credit. 

Disclaimer: This overview of the federal investment tax credit for solar panel installations does not constitute as professional tax advice and should not be the only source of information when making purchasing decisions.