October 2, 2014

Am I Eligible for Solar Investment Tax Credit?

Solar Investment Tax Credit (ITC)

If you’re buying a solar energy system today, one of the most generous solar incentives that you’re entitled to is the 30% federal Investment Tax Credit (ITC). But not everyone who goes solar is eligible to receive it so it’s important to do your research.

The solar investment tax credit is an important federal policy mechanism to support the deployment of solar energy in the United States. Tax policies related to renewable energy play a vital role in creating new high-wage American jobs, spurring economic growth, ensuring U.S. global competitiveness, lowering energy bills for consumers & businesses and reducing pollution. The solar investment tax credit reduces the tax liability for businesses that purchase qualifying solar energy technologies. Under the current law, the investment tax credit (ITC), which provides a 30% tax credit for residential and commercial solar projects, expires at the end of 2016. After that, the ITC loses two-thirds of its value, dropping to a 10% credit.

Energy.gov states:

“In general, credits are available for eligible systems placed in service on or before December 31, 2016:

”Solar.” The credit is equal to 30% of expenditures, with no maximum credit. Eligible solar energy property includes equipment that uses solar energy to generate electricity, to heat or cool (or provide hot water for use in) a structure, or to provide solar process heat. Hybrid solar lighting systems, which use solar energy to illuminate the inside of a structure using fiber-optic distributed sunlight, are eligible. Passive solar systems and solar pool-heating systems are ”not” eligible.”

Any U.S. tax payer who purchases a solar or other renewable energy system is eligible to receive the 30% solar ITC. However, if you installed your solar system with a solar lease or a solar PPA, then you’re not eligible, since the leasing company owns your solar system, so they will receive the ITC. However, most leasing companies take the value of the 30% ITC into consideration when calculating your lease rate, so there is an indirect benefit to the consumer. It’s also important to note, a tax credit is not a tax deduction. With a tax deduction, you deduct some amount off your gross income to determine your taxable base income. A tax credit is much better. It can be used to pay off your owed federal taxes. So, it’s similar to receiving an IRS gift card.

These incentives can be used to offset any federal tax liability you may have. This makes installing your PV panels incredibly affordable. But with the tax credit due to drop or expire soon, now is the time to act.


KMB Design Group is at the forefront of the escalating solar industry, and is considered a leading consulting firm in the renewable energy field providing photovoltaic design and engineering services. Our Solar engineers will give you full analysis and let you know how much energy can be drawn with considerations such as location, obstructions and orientations. We will also provide you with the best designs that will give you maximum output. Licensed in 49 states, we have the ability to work nationally without limitations.