Solar incentives and tax credits can help reduce the cost of installing solar for both residential and commercial energy users. Please be sure to consult with a tax expert and review all the guidelines and rules carefully.
Federal Solar Tax Credit
These days, one of the best incentives most people can get to help reduce the cost of installing solar is the Federal Solar Tax Credit, also known as the Investment Tax Credit (ITC). The ITC is a 30 percent tax credit for solar systems on residential and commercial properties. There is no dollar amount cap amount on the ITC, but it is important to note that it is a non-refundable tax credit, meaning the amount of credit you are eligible for is tied to your tax liability. We’ve said it before and we’ll say it again, talk to a tax expert.
Important Dates! The Federal Solar Tax Credit is phasing down. Solar installations completed after December 31st, 2019, won’t be eligible for the 30% tax credit. Starting in 2020, the tax credit steps down to 26%, then down again in 2021 to a 22% credit. The Federal Tax Credit will no longer be available on January 1, 2022!
Qualifying for the ITC: Eligibility for the ITC for residential customers requires that a system be “placed in service.” This means that installations must be complete by the end of 2019 to be eligible for the full 30% tax credit. Alternatively, commercial customers must “commence construction” to qualify. The Solar Energy Industry Association has a helpful outline that explains the requirements taxpayers must meet to claim the ITC.
Utah Solar Tax Credit
Rooftop solar for your home: Local incentives for local people! The Utah solar tax credit, officially known as the Renewable Energy Systems Tax Credit, covers up to 25% of the purchase and installation costs for residential solar PV projects, capped at $1,600 of cost, whichever is less. Learn more and apply here.
Rooftop solar for your business: A rooftop solar tax credit is also available for larger commercial projects! The commercial Investment Renewable Energy Systems Tax Credit, for solar photovoltaic systems, is refundable and covers up to 10% of the eligible system cost or $50,000, whichever is less. The Commercial incentive can only be claimed on the same year’s taxes as when the solar system was installed. Learn more and apply here.
The Utah tax credits are phasing down too. For residential systems, the cap dollar amount you can receive begins to phase down as follows:
- 25% capped at $1,600 until 12/31/20
- 25% capped at $1,200 until 12/31/21
- 25% capped at $800 until 12/31/22
- 25% capped at $400 until 12/31/23
- Utah tax credit expires in 2024
Things to consider if you sign a Power Purchase Agreement (PPA)
As long as you own your solar energy system, you are likely eligible for some or all of the solar tax credit. Again, contact your tax consultant. But, it is important to note that if you opt to sign a lease or PPA with a solar installer, you are not the owner of the system, and thus you cannot receive the tax credit.
There are no utility incentives for rooftop solar
Alas, Utah’s utilities no longer provide rooftop solar incentives. But if you decide not to own your solar but want to invest in cleaner energy, you can sign up for Rocky Mountain Power’s Subscriber Solar program, available to Logan, St. George, and Rocky Mountain Power customers.