Just as the time was drawing near, Congress passed its relief package at the end of 2020, with some heralding it the Energy Act of 2020. This substantial environmental win gave provisions for reducing hydrofluorocarbon (HFC) emissions, funding for renewable energy research and development, and extensions for the existing solar and wind tax credits, as well as tax credits for off-shore wind-based projects. With the solar tax credit, or investment tax credit (ITC), set to decrease in 2021, this legislation gave those installing new solar projects two additional years of federal tax credits.
Since 2006, solar’s ITC has encouraged more than 50% average annual growth for the solar industry but has relied on new legislation to keep it running throughout the past 15 years. Without these federal tax credits, it would have been challenging for solar to develop adequately against the long-standing fossil fuel subsidies. The ITC gives solar a more even playing field to grow into the energy for now and the future. More development is still needed, though, with many scientists saying 2020 is the start of the last decade to get our act together with environmental issues.
2020 Energy Act’s ITC Details
The new legislation gives new solar projects a 26% federal tax credit for two more years instead of declining to 22% this year as initially planned by the 2015 extension legislation. The new package extends the 26% rate for projects starting through 2021 and 2022 for all residential and commercial installations. The solar investment tax credit will drop to 22% at the beginning of 2023, with 10 % for commercial projects only in 2024.
The next two years are the window to take advantage of the solar tax credit on any of your solar projects. Don’t wait to save your hard-earned money and get started today with reliable and expert professionals like Option One Solar.