Residential Solar Energy Tax Credit
The Residential Solar Energy Tax Credit, also known as the Investment Tax Credit (ITC), is a federal tax incentive designed to encourage homeowners to install solar energy systems.
Under this program, homeowners can claim a percentage of the total cost of their solar system installation as a tax credit on their federal income tax return. For example, if the installation costs $20,000 and the credit is 26%, the homeowner can reduce their tax liability by $5,200. The credit is applicable to solar panels, solar water heaters, and other qualifying solar energy systems. It is a non-refundable credit, meaning it can reduce tax liability to zero but not result in a refund.
The credit was set to gradually decrease over the years, making it essential for homeowners to take advantage of it before it is reduced or expires.
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