The solar Investment Tax Credit (ITC) which was scheduled to step down to 22% in 2021 and then disappear completely in 2022, has been extended thanks to the hard work and perseverance of the solar community and SEIA!
In December 2020, the U.S. Congress passed a massive spending bill including $35 billion in energy research and development programs and a two-year extension of the Investment Tax Credit for solar power – a big boost for the solar energy industry!
In 2021 and 2022, both the residential and commercial ITC are equal to 26 percent, it then steps down according to the following schedule:
- 26 percent for projects that begin construction in 2021 and 2022
- 22 percent for projects that begin construction in 2023
- After 2023, the residential credit drops to zero while the commercial credit drops to a permanent 10 percent
The ITC may be applied to your solar system’s full installation cost (materials and labor), as well as batteries and any necessary onsite preparation, such as replacing electrical panels, rebuilding electrical service, or reinforcing roofs. There is no maximum or cap on the expense amount.
- The solar system must be installed on the taxpayer’s primary or secondary residence, and the system must be installed by December 31 of the same tax year in which the homeowner plans to use the credit.
- Any unused tax credit can be carried forward the following year.
For more information check out the fact sheet here.