Installing Solar Panels: Are You Eligible for a Tax Benefit?

Installing Solar Panels: Are You Eligible for a Tax Credit?

If you can ever collect a tax credit as a homeowner, then you are more than likely going to want to do that. Everybody likes getting a rebate, and if you can help the environment at the same time, so much the better. There are many green initiatives that can potentially put you in line to get some money back from the state or federal governments, and you can also frequently save money on your energy bills if you implement them.

Solar panel installation is one viable area that is becoming more attractive to many homeowners around the country in this young century. Solar panels seem to be the wave of the future, at least according to many experts in the renewable energy field.

You might wonder if you are eligible for a tax credit or any other kind of rebate if you decide to install some. There are more and more companies becoming nationally prominent that can do this for you, and it behooves you as a homeowner to look into them.

In this article, we’ll tackle the subject of whether installing solar panels makes you eligible for a tax credit or for any other kind of rebate. Potentially getting some money back will likely get you in a good mood the next time tax season rolls around.

Can You Get a Tax Credit from the Federal Government?

Let us start by talking about this question in the most general sense. If you got solar panels installed, or if you’re going to get them installed, then the short answer is yes, you can get a tax credit from the federal government.

If you got them installed during the calendar years 2020 or 2021, then you should be eligible for a one-time tax credit of 26% of the purchase price. That price will vary according to what company you used, but collecting this money on your tax return should be straightforward.

To look into this further, you can visit the Department of Energy’s website. You can also stop by the IRS website and find more information there.

There are forms you fill out that will tell the federal government all of the most relevant details. Those will include how much money you spent and what company you used. You should see that money come back to you as part of your tax return, provided you filled out the forms correctly and gave the government all of the relevant information. 

You should also know that in August of 2022, there was a notable extension passed by Congress that is even more helpful in this regard. If you got solar panels installed in your home from that time to now, or if you’re going to get them installed from now until 2030, then you can get a rebate of 30% of what you paid for them. Since that could be several hundred dollars, it is definitely in your best interest to look into this and follow through.

Can You Get a Tax-Filing Company to Do This For You?

If you don’t want to go through the trouble of applying for the rebate on your own, and you are going to hire a company like H&R Block or one of the many others that’s in the market to do it for you, then you can ask them to handle the paperwork. As long as you get them the name of the company that sold you the solar panels and all of the other relevant information, you should still get the same rebate.

Keep in mind, though, that if you do this, the money you will get back will probably be at least somewhat offset by what you’re paying the company that’s doing your taxes. That’s why you may want to consider doing the filing yourself.

If you feel like compiling all of the necessary paperwork is too much of a hassle, though, then you might feel like the cost of hiring a company to act on your behalf is worth it.

What About Rebates at the State Level?

You may also wonder about any additional rebates or tax benefits that you might get at the state level if you have solar panels installed in your home. Remember that you must file both state taxes and federal taxes every year, with a few exceptions in individual states.

Your income is typically taxable at both levels. The state in which you live will want their piece if you owe them anything at the end of the year.

The bad news is that for the most part, the rebate you get comes at the federal level but not the state one. That means you can’t double dip, so to speak.

However, it is at least worth it to mention it to your tax company to see if they have any information that’s not available to you. Every state handles rebates and their local tax code a little differently, and there might be some states that are more favorable to green initiatives like the one we’re describing.

Are There Any Exceptions That You Should Know About?

If you get solar panels installed in your home and you are the primary or sole owner of the building, then that is when you are eligible for the one-time tax benefit at the federal level. If you are renting the property, though, you can’t take advantage of this rebate. If you try, then you can get yourself in a lot of trouble with the federal government, so that’s a path you will certainly want to avoid.

More families and individuals who own homes are looking into buying solar panels every year. It is a way to save money on your energy bills in the long term. Also, if you live in a part of the country that sees a lot of sunshine year-round, you’re an even better candidate to take this particular action. The tax credit you get on a one-time basis is just the icing on the cake.

Related Article:

• The ABCs of Solar Panel Installation and Care
• The Best Solar Panel Configuration for Your Home