Isaksen Solar Blog
As a homeowner, perhaps the largest aid to switching to solar energy is the Federal Solar Tax Credit which discounts the price of solar panels. As you may have heard, the official signing of the ambitious Inflation Reduction Act this week has made this tax credit even more friendly for homeowners by extending the rebate and increasing the tax breaks. With the signing of the act, the U.S. has made its biggest commitent and investment to clean and solar energy, while also cementing the U.S. as the world’s leader in clean energy initiatives.
“Electricity customers across the country will benefit greatly from the clean energy tax credits included in the Inflation Reduction Act,” Edison Electric Institute President Tom Kuhn said in a statement. “This monumental legislation provides much-needed certainty and will help electric companies reach a clean energy future faster, without compromising on the reliability and affordability that customers value.”
In other words, this is a huge boost for renewable energy! Homeowners will now see more financial support to go green by receiving tax credits for energy efficient appliances, electric vehicle purchases and rooftop solar panels.
When looking specifically at solar panels, the federal government has incentivized homeowners to make the switch to solar panels with the solar investment tax credit (ITC) since 2005. The rate before the bill being signed gave homeowners the ability to claim 26% of the their entire solar panel installation cost on their federal taxes which is a number that has been decreasing since its inception. If you had your solar panels installed by December 2019 the incentive was 30%. This figure was set to decrese again to 22% in 2023 and be completely eliminated in 2024.
With the Inflation Reduction Act being official signed on Tuesday, homeowners will see increased and extended incentives for adding rooftop solar panels.
- 30% tax credit of the total cost for solar panels
- This credit extends and increases the existing tax break by 10 years
- The extension of this credit would include all solar installation costs incurred this year, 2022, until 2032
- In 2033, the credit would fall to 26%
- In 2034, the credit will drop again to 22%
- The new tax credit also includes costs for solar batteries which were not included in the previous solar tax credit
- The solar battery tax credit starts on costs incurred in 2023
An example of the average savings a homeowner could see:
- If the total cost of your solar panels is $20,000, then you would receive $6,000 in solar text credit making your total payment of switching to solar energy $14,000. You would receive your solar incentive in your following years tax return. If your tax liability is less than the ITC amount, your credit will be rolled over into the next year’s return. The rollover is effective for up to 5 years and you will not be able to receive any of the federal solar tax credit in a tax refund.
- Added to the tax credit could be an additional $2,500 a year of savings. This is the savings an average household that uses 893 kwh of energy a month will see on their electric bills every year. This does not include additional benefits from incentive programs like SMART, where homeowners receive monthly payments for their solar system production.
Inflation Reduction Act Non-Solar Benefits
Even if you do not make the switch to solar energy, homeowners could still see savings of $170 to $220 a year in electricity costs from the policies included in the bill. This will be accomplished by increasing the diversification of the energy source mix. Modeling shows that increasing the amount of clean electricity that makes up the grid will protect homeowners from shocking rises in fuel prices and volatile price swings. ” Currently, homeowners are faced with expensive pricing and aggressive electricity rate hikes due to our reliance on fossil fuels and increased demand.
Overall, the Inflation Reduction Act is estimated to reduce greenhouse emissions by 42% from the levels in 2005. If the actual reduction reaches the estimated levels this would close emissions to within two-thirds of the remaining gap of the U.S.’ 2030 climate goal. Currently, clean energy only makes up about 4% of U.S. energy production.
If you have been waiting to go solar or have questions about how you could benefit from the new Inflation Reduction Act, don’t hesitate to give us a call, or start your free solar quote now! If you are looking to take a deeper dive into the Inflation Reduction Act and its benefits beyond solar, you can find more info here.
Should I Get Solar Panels?: A Quick Guide To Buying Solar Panels For Your Home
Benefits of Purchasing Solar Panels
- Monthly Savings On Your Electricity Bills
- The biggest motivator for homeowners to switch to solar is seeing an immediate savings in their next monthly electricity bill once they are installed. Across the country electricity prices continue to rise at historic rates. This is why solar in Massachusetts has become so popular. As of Feburary 2022, Massachusetts has the 4th highest electricity rates in the country. Rhode Island solar panels are also popular as they have the 5th highest electricity rates. Homeowners looking for ways to save money have found solar panels are an efficient solution that creates long-term savings. Instead of paying the local electricity company for your energy supply you are supplying your own energy from your roof or ground mount solar panels. Your solar panel installation will create enough energy to cover your monthly electricity usage so you no longer need to pay your energy provider for their energy. This means the constantly increasing electricity bill you have will now be delivered with ‘No Payment Due’ and in some cases adding credits to your account for overproduction!
- Lifetime Of Financial and Environmental Savings
- With solar panels those monthly savings turn into lifetime savings and a meaningful contribution to helping the environment. By creating your own energy through purchasing solar panels, you avoid paying rising electricity rates that change with the price of natural gas. In most cases, you pay a locked-in rate or loan fee for the lifetime of your solar panels. In 2022, the average price of electricity rose 7.5% from 2021, which meant more expensive electricity bills. With solar in Massachusetts, everytime the price increase that is additional savings for your household since your price stays the same. Once your solar panels are paid off, your electricity is completely free. Over the 25 year lifetime of solar panels that could equal $60,000 in savings. The additional benefit to buying solar panels is the reduction of CO2 emissions since you no longer rely on natural gas. One solar panel can offset have the same CO2 offset as planting 10 mature trees. For the average home that produces 7,000 Watts of solar power, this is the same as planting 180 trees a year. For this reason solar panels is the most significant way to decrease your carbon footprint without disrupting your current way of life.
- Option To Lease Solar Panels or Purchase Solar Panels
- How much money you will save on your solar panels depends on your choice to lease or buy solar panels. If you lease your solar panels then you will not have any upfront cost. Instead of paying a large sum upfront, you get panels on your roof and a locked in monthly payment. This monthly payment will be less than your current electricity bill. However, leasing solar panels can open the door for increased payments in the future if your lease agreement forces you to pay for increases in electiricty rates as the price of energy increases.
- When you purchase solar panels there is an upfront cost which is usually paid for with a loan or cash. However, the total cost of solar will be offset by solar incentives. There are both federal solar tax credits and Massachusetts solar incentives available. These programs will decrease the total cost of solar panels and increase your savings each month and over the lifetime of your solar panels. When leasing solar panels, homeowners do not qualify for these incentives or the ability to create credits which adds up to a lot of added money over the lifetime of your solar panel installation.
- How Much Do Solar Panels Cost?
- Every home solar panel installation is unique. There are a lot of factors that go into determining how much solar panels will cost you. The key factors are how much energy you use, how many panels your home can support, whether you lease vs buy solar panels and what solar incentives you qualify for. The only way to know the price you will pay to install solar panels will be to get a solar quote. At Isaksen Solar, we quote solar for your home at your consultation free of charge.
- Truth About Solar Panels
- We understand buying solar panels can be a major decision for homeowners. That is why the most important part of installing solar panels should be to find the best solar companies in MA and RI. A search of “solar companies near me” is a good starting point. The goal for every homeowner should be to find a solar company they trust. Whether its MA solar or RI solar panels, where to buy solar panels is an important question to answer. At Isaksen Solar, we aim to make the home solar panels process as simple as possible and answer all your questions.