The Investment Tax Credit (ITC) for solar power has been in the news a lot lately. On April 4, more than 100 Representatives called for legislation to extend the ITC as part of an effort to fight climate change. On the same day, Pennsylvania Rep. Mike Doyle (D) introduced a bill that would allow the ITC to cover energy storage as well. It is perfect timing since the 30% tax incentive for solar is set to begin sunsetting at the end of 2019.
There’s good reason to extend it, too. The ITC has helped lower people’s energy costs across most of the US and helped the industry experience a 50% compound annual growth rate. It has expanded access to low-cost rooftop solar power as well, creating hundreds of thousands of jobs in the process—more than paying for itself over the years. All of which has helped drive down the cost of solar power for everyone.
But now the popular incentive is facing its latest inevitable end. Over the next few years will steadily drop for homeowners until it phases out in 2022.
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Solarman says
From the article: “However, 2019 is the last year to qualify for the full 30% ITC. Starting in 2020 homeowners will only qualify for a 26% ITC, and in 2021 it falls to 22%. After that homeowners won’t qualify for the ITC at all, but commercial solar will qualify for a 10% ITC after 2022. So it really is the best time to consider going solar if you want the best tax incentives.”
Congress has kicked around an ITC that is permanent in the tax code. Mention of a permanent 25% ITC has been one proposal. Will this happen in 2020 or 2021 before the Federal tax credit phases out? The IRS tax law changes in reference to the ITC and energy storage systems seems to hint some kind of extension is coming. Historically early on in the late 1990’s and early 2000’s the Federal tax credit for solar PV, wind, micro-hydro or fuel cell self generation was capped at $2,000. Then along came the Energy bill and the ITC was increased to 30% no matter what sized system was installed. Your regular John Doe could now entertain installing solar PV on his roof and get a tax deduction to decrease the up front costs of installing the system. Then energy storage was added to the equation and one can install solar PV plus energy storage and still use the ITC.