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Federal Bail-Out Bill Includes Beefy Tax Benefits for Solar
Published by dave | Filed under Solar News
The $2000 Federal Tax Credit for residential solar energy installations was slated to dissappear at the end of this year. Many times Congress has attempted to pass a bill to extend those credits and many times they had failed. It was looking pretty bleak until some tax incentives for renewable energy were added on to the Emergency Economic Stabilization Act of 2009 this Friday.
There were many tax benefits for solar energy but here are the most important ones applicable to the residential market and what they mean:
(Keep in mind we are not tax professionals and please don’t act on any of this information without consulting a tax professional.)
1. The 30% Tax credit was extended for 8 years, and the $2000 cap was removed for residences. That means huge things for the residential market and your pocketbook, as well, if you install solar energy on your home. Let’s say the average solar installation is $30,000, well now you’re talking about $10,000 in tax benefits vs. the old $2000… it’s a big change. The new way starts on Jan 1st, 2008, and the demarking event that decides when it was “placed in service” is the interconnection by the utility.
2. AMT filers can now get the credit. This used to kill a lot of projects on small commercial applications when the owners or partners were paying AMT… now they can still take advantage of the 30% investment tax credit for solar.
6 Responses to “Federal Bail-Out Bill Includes Beefy Tax Benefits for Solar”
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October 7th, 2008 at 5:10 pm
is the 30% on the gross installation costs, or the installation cost net of CSI and SFPUC rebates?
October 9th, 2008 at 11:56 am
This is great information. I have learned more looking at your website in the past 20 minutes than I have in the past year since I began lookiing into this seriously a year ago.
Thank you so much - you have really energized our hopes for this again!
October 9th, 2008 at 3:10 pm
Alex, it’s 30% of the basis price. If you assign a state or city rebate to the installer and that comes off of your out of pocket, you cannot take the credit on that. As a result you will see more people assigning the rebates to themselves and coughing up extra cash. Again, consult your tax professional please before acting on any of this.
Deidra -
Thanks!
October 11th, 2008 at 2:11 pm
What if I want to do both solar hot water AND photovoltaics? Can you help me with that, too?
December 21st, 2008 at 9:23 pm
Can you give a simple example how much money is a 30% credit?
Assume; $70,000 yearly income
System cost: $30,000
Taxed rate: 22%
make any other assumptions needed.
January 3rd, 2009 at 8:49 pm
Hi gus,
the tax credit is 30% of your out of pocket cost (please consult a tax professional before acting on this).
In that case, you would have a $10000 credit. The rate you are taxed at would not matter since it is a credit, not a deduction…. essentially as good as cash assuming you have that much tax liability, which you probably would in the case you mention.