Due to the reduction in cost and increased efficiency, solar energy sales have increased significantly over the last few decades. However, the solar ITC New Jersey has also encouraged investment in solar panel systems. These are a few things you should know about this tax credit.
What is the ITC
The ITC is a federal tax credit given to individuals and businesses that invest in solar power systems. Since its adoption in 2006, solar installation has increased at a rate of 52% per year. This credit encouraged investment in solar technology, leading to higher-quality, more-efficient products. It has also increased the renewable energy job market and added growth to the US economy.
In 2020, individuals and businesses who invest in solar energy systems will receive a 26% tax credit. This credit covers both the cost of the system and its installation. However, this rate will decrease to 22% in 2021 and 10% after 2022. Therefore, anyone who invests today will receive a significantly greater credit than those who invest later. This credit was extended in the past at a reduced rate.
Those who purchase a system are eligible for the credit. Therefore, if you rent or lease your equipment, your system and its installation are not eligible for the tax credit. However, if you purchase your system using a loan or other form of credit, it can still be deducted from your taxes.
If your tax liability is lower than your credit, your credit can be rolled into next year’s taxes. In addition, it can be used to pay off outstanding tax debt. IRS Form 5695 is used to note this credit, but most tax software offer the credit in their default settings. If a CPA or accounting firm fills out your taxes, let them know if you have purchased a system.
Don’t miss out on the opportunity to reduce the cost of your solar system. Consider consulting a reputable solar energy company to discuss all the benefits of these systems.