Spoiler: It WON’T be this good next year!

The 30% Federal Tax Credit which was initiated in 2006 is set to expire at the end of 2019.  The Tax Credit has been the biggest contributor to the Solar Boom we have experienced over the last decade and 2019 will be the biggest year for solar energy to date.  In this article, we will take a look at what the 30% Federal Tax Credit is, how it works and how you can take advantage of it.  We will also explore how rising electricity rates has made solar even more affordable and the financing options that are available that will allow you to use the money you already pay the power company to purchase your own system with no money down and no money out of pocket.  Lastly, we will give you an incorporated view on how all of these current solar trends can work for you. The 30% Federal Tax Credit allow Home or Business owners to claim 30% of the cost of there Solar Panel System or other energy efficient upgrades to your Federal Income Tax as a Credit.  A tax credit works differently than a tax deduction. A Tax Credit is much more valuable as it is a dollar for dollar reduction in tax responsibility as opposed to a deduction that would only represent the taxable portion of the amount being deducted.  Another important variable to consider in taking advantage of the 30% Federal Tax Credit is the tax credit is directly related to the amount of Federal Income Tax that you have paid if you are a W-2 Employee or the Amount of Income Tax that you owe.  Why that is important to understand is because if you do not pay or owe it you can not claim it. This sometimes will affect eligibility if you are on disability or if you are retired and only collecting Social Security.  However many seniors on Social Security still qualify for The tax credit if they also are collecting income from a pension, investments or other retirement funds that are not associated with their Social Security. Also, If you have paid less in Federal Income tax than what your 30% Federal Tax Credit is that will limit your tax credit to the amount of the Federal income tax that you paid for that year.  You are able to carry over any of your remaining Federal Tax Credit to the following year.  You actually have up to 5 years to claim your entire credit. Here is an example: Let’s say that you have paid $5000 in Federal Income Tax but your 30% Federal Tax Credit is $10,000.  You would be able to claim $5,000 of your tax credit for the current year and you would carry over a $5,000 Federal Tax Credit for the following year. 2019 is the last year that the 30% Federal Tax Credit will be available.  This has been a tremendous program that has helped millions of homeowners upgrade their homes with energy efficient Solar Energy.  It can represent an Income Tax Credit that is dollar for dollar cash savings on anywhere from $3,000 to over $20,000 and maybe more depending on the scope of the Solar Energy System you are considering.  With the 30% Federal Tax Credit expiring this year it is your last chance to get incredible additional savings added to an already affordable alternative to traditional energy. If you are considering Solar Energy now is the time. Getting Solar in 2019 and taking advantage of the 30% Federal Tax Credit will give you the opportunity to convert your expensive monthly power bill into an incredible investment that will increase the value of your home while reducing your energy cost all while using the money that you already spend.  The reason why this year makes Solar an incredible investment is really 3 factors. The First reason is you are paying more for electricity now than in 2006. The cost of your energy which the power company bills in kWh have gone up by over $3.00 a kWh since 2006 when the Federal Tax Credit took effect.  That means you are paying 35% more now when in 2006. Secondly, The price of solar energy has dropped by almost 3 times its cost from 2006. Solar energy is sold by the size of the system you need and the price is determined by taking the total number of watts required and multiplying it by the price per watt.  So if the price per watt in 2006 was over $8.00 per watt when the 30% Federal Tax Credit began, and today the price per watt has dropped below $3.00 per watt that over a 160% decrease in the cost of Solar Panel Systems. What this means is that in 2006 the 30% Federal Tax Credit was needed to justify the cost of the system an to help homeowners achieve a long term return on investment.  But with those changes today the 30% Federal Tax Credit will create an immediate Return on Investment. So much so that you will often be able to have the same rate or lower rate than what you are currently paying the power company and still be able to pocket the Federal Tax Credit in cash the following year. I do not know of any investment where you do not have to spend one dollar more than you already do for an expense and can cash out in less than a year for potentially over $10,000 in cash. The Future for Solar Energy is bright as energy costs continue to rise while the cost of solar has dropped to all-time lows.  The more the cost of energy rises the cheaper solar energy will become. I don’t know about you but I don’t see the power companies lowering there rates any time soon.  They will probably continue to raise them 3-4% per year which will simply be a built-in profit return every year you have solar. Because once you purchase solar you are fix rating you energy expense while you pay off the system and then you will have no Solar Panel System cost and a significantly reduced energy cost of up to 95% lower than your current expense.  So the future is bright. However,  with the tax credit, it is a once in a lifetime opportunity to create an instant return on investment without using any money that you don’t already spend.  Simply reallocating it and creating a great investment and return. If there are any extenuating circumstances that will not allow you to take advantage of the Federal Solar Tax Credit in 2019 do not fret as the Solar Tax Credit will be phased out over the next 3 years. In 2019 The Tax Credit will be 30% (The last year where it will be this high).  In 2020 The Federal Tax Credit will drop to 26% of the purchase price of your Solar Panel System. In 2021 The Federal Tax Credit will drop to 22% of the purchase price of the Solar System. In 2022 The Federal Tax Credit will no longer exist for residential homeowners. For Commercial Solar there will be an ongoing 10% Federal Tax Credit.