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FEDERAL TAX CREDITS for RESIDENTIAL and COMMERCIAL SOLAR INSTALLATIONS: SAVE UP TO 30%

The Consolidated Appropriations Act, signed in December 2015, extended the expiration date for solar electric systems, and introduced a gradual step down in the credit value for this technology. The credit for wind systems was not extended and will expire at the end of 2016. Combined with state rebates and low component prices the savings can be even greater.

The current credit allows taxpayers to potentially claim a credit of up to 30% of qualified expenditures (including labor) for a system that serves a home located in the United States that is owned and used as a residence, even part time, by the taxpayer. 

There is no maximum credit for systems placed in service after 2008
• Solar-electric systems must be placed in service on or after January 1, 2006, and on or before December 31, 2021
• Wind systems must be placed in service on or after January 1, 2006, and on or before December 31, 2016
• The system does NOT have to be the taxpayer’s primary residence
• The bill allows taxpayers to use the credit to offset AMT liability

The federal tax credit for small wind-energy systems is 30% of installed cost.  This credit will expire 12/31/16.

The federal tax credit for solar-electric systems varies depending on the date the system is placed into service.  
   • 30% for systems placed in service by 12/31/2019
   • 26% for systems placed in service after 12/31/2019 and before 01/01/2021
   • 22% for systems placed in service after 12/31/2020 and before 01/01/2022

Examples of how this works:

If your PV system is installed by 12/31/2019 and costs $9,000
& your tax liability for the year is $6,000
You would reduce your tax liability by $2,700 (30% credit) and only pay $3,300.

If your PV System is installed by 12/31/2019 and costs $6,000
& your tax liability for the year is $1,000
You would eliminate your tax liability for the year,
and have the option to carry the remaining credit over to the following year.

For more information on state rebates and incentive programs visit: www.dsireusa.org

Residential Renewable Energy Tax Credit