Guide To Federal Solar Panel Incentives

Solar rebates and incentives are an efficient method to reward solar photovoltaic (PV) system owners for making the environmentally friendly energy shift, while also providing prospects with the final push they need to go green with a viable alternative to traditional power supply.

By far the most compelling reason to go solar is to reduce your carbon footprint and to choose environmental health over complacency, but the financial benefits are also quite compelling. Consider the following government incentives and rebates if you presently own or are contemplating purchasing a solar photovoltaic system.

Incentives For Residential Solar Power

Residential Renewable Energy Tax Credit

If you own a home and install a solar panel system, you may be eligible for the Residential Renewable Energy Tax Credit.

The credit reimburses you for the cost of labor used to prepare the site, assemble, install, and connect pipes or wiring to your house. If your tax due is less than the amount of the tax credit, the excess credit will carry over to the following tax year.

Tax credit percentages vary according on the date of your installment:

  • 30% discount on systems installed by December 31, 2019
  • 26 percent for systems installed after December 31, 2019 but before January 1, 2023
  • 22% for systems installed after December 31, 2022 and before January 1, 2024
  • There is no maximum credit for systems installed after 2008.
  • Between January 1, 2006 and December 31, 2023, systems must be deployed.
  • Additionally, the taxpayer’s principal residence does not have to be the installation’s site.

Residential Energy Conservation Subsidy Exclusion (Personal)

This personal income tax exemption is applicable to single-family and multifamily residential buildings as an energy conservation subsidy with a 100% incentive value. Energy conservation measures suggest that utility rebates for home photovoltaic systems are tax exempt; therefore, if your public utility provider offers you with this form of subsidy, it is tax exempt.

When a taxpayer claims federal conservation credits or deductions, the investment must be reduced to the amount of the subsidy. Finally, a taxpayer cannot claim credit for a cost that they did not incur.

Commercial Solar Incentives

Residential Energy Conservation Subsidy Exclusion (Corporate)

This business tax exemption is identical to the last one, except that it is a company subsidy exemption rather than a personal subsidy exemption. Both receive a 100 percent subsidy.

Tax Credit For Business Energy Investment (ITC)

The Investment Tax Credit provides a range of tax benefits for the installation of solar photovoltaic equipment on a property.

This business credit has undergone several revisions. However, the following values will apply if your solar photovoltaic (PV) development begins by the specified dates:

  • 26 percent on or after December 31, 20 and before December 31, 23
  • Between 12/31/23 and 12/31/25, 22%
  • The subsequent years are 10%.

Renewable Electricity Production Tax Credit (PTC)

The Internal Revenue Service (IRS) administers this corporate tax credit, which enables taxpayers to sell electricity generated and get credit for that taxable year. Legislation has reduced the credit for certain technologies, including as wind, however solar PV remains eligible at the full amount of $0.013/kWh.

You can claim your credit on IRS Forms 8835 (Renewable Electricity Production Credit) and 3800 (Renewable Electricity Production Credit) (General Business Credit). The credit is valid for the first ten years of operation of your system. Any unused credit may be carried forward for a period of up to 20 years or carried back one year if a taxpayer submits an updated return.

Modified Accelerated Cost-recovery System (MARCS)

This corporate depreciation incentive allows companies to claim depreciation on solar PV systems installed on selected premises. The MACRS contains a set of class lifetimes ranging from three to fifty years for various attributes.

The Tax Cuts and Jobs Act of 2017 raised bonus depreciation to 100% for any qualified property with equipment placed in operation between September 27, 2017 and January 1, 2023.

TAX CREDIT FOR ENERGY-EFFICIENT NEW HOMES FOR HOME BUILDERS

The IRS administers this corporate tax credit, which is applicable to the construction industry. Your house qualifies for the Energy-Efficient New Homes Tax Credit for Home Builders if it is situated in the United States, was finished before to December 31, 2021, fulfills statutory energy efficiency criteria, and was bought from a contractor after December 31, 2013 and before January 1, 2022.

Your reward may range from $1,000 to $2,000 for the tax year, depending on your energy savings and the kind of home.

PROGRAMS FOR BONDING, LOANING, AND GRANT APPLICATIONS FOR SOLAR PV POWER FAN

LOAN PROGRAM – NIE MAE GREEN FINANCING

This financing program is available to owners of five or more unit multifamily buildings. The incentive assists apartment building and cooperative owners with their mortgage payments in order to finance energy and water system efficiency upgrades.

Contacting a Fannie Mae DUS lender will assist you in learning more about the program and determining your eligibility.

MORTGAGES THAT ARE ENERGY EFFICIENT

This financing program assists homeowners in making energy-efficient upgrades to their existing homes or in purchasing a new energy-efficient house.

While some people are sadly denied loans, energy-efficient mortgages are guaranteed by the Federal Homes Administration (FHA) and the Department of Veterans Affairs (VA) to ensure loan approval for those interested in eco-friendly housing.

USDA – PROGRAM FOR RURAL ENERGY IN AMERICA (REAP)

REAP is a program administered by the United States Department of Agriculture (USDA) that provides loan guarantees and grants to assist small businesses and agricultural producers in rural areas with the purchase, installation, and construction of renewable energy systems and/or energy efficiency improvements to nonresidential facilities on their property.

The USDA administers its own financial offerings for loans and grants:

  • Grants: Up to 25% of the projected cost of the project; renewable awards range from $2,500 to $500,000; and efficiency grants range from $1,500 to $250,000.
  • Maximum loan amount of $25 million
  • The sum of grants and loans cannot exceed 75% of the entire cost of the project and must be at least $5,000, with the grant part not exceeding $1,500.

USDA – REAP ENERGY AUDIT AND RESOURCE DEVELOPMENT ASSISTANCE PROGRAM (EA/REDA)

The REAP EA/REDA Program provides technical support and site evaluations for agricultural producers and small enterprises in rural regions interested in installing renewable energy systems. Land grants are also available for schools (excluding K-12), public colleges, and other institutions.

Applications are restricted to one energy audit and one REDA each tax year, with a maximum offer of $100,000 to assist with renewable energy project wages, audit and development assistance travel costs, administrative fees, and office supplies, utilities, and project-related equipment.

LOAN GUARANTEE PROGRAM OF THE UNITED STATES DEPARTMENT OF ENERGY

The Department of Energy administers this loan guarantee program for borrowers with energy projects that are either in the early stages of commercialization or utilize considerably enhanced commercial technology.

The loan must be repaid in full within 30 years or when 90% of the energy system’s expected lifetime has been reached. Interest rates are calculated on the basis of the borrower’s credit history and are applied to loans.

The DOE’s loan guarantee program page has further information on eligibility and interest rates.

[Related: Solar Panels’ Average Lifespan]

USDA – GRANT PROGRAM FOR HIGH ENERGY COSTS

The USDA Rural Utilities Service administers this grant program to help in the development of renewable energy in rural regions.

The incentive is available to towns with energy expenses that are 275 percent higher than the national average for single-family homes. Retail electricity suppliers in rural areas that service nonprofit organizations, commercial firms, and state, municipal, and tribal governments are eligible.

Grants ranging from $50,000 to $3 million are available for solar photovoltaic energy projects, which include the following:

  • Facilities for the generation, transmission, and distribution of electricity
  • Renewable energy installations for electricity generation on- or off-grid
  • Equipment for emergency and backup power generating and energy storage

POWERSAVER LOAN PROGRAM OF THE FEDERAL HOUSING AUTHORITY (FHA)

This loan program is handled by the FHA and is available to homeowners and low-income homeowners who wish to replace or improve their renewable energy systems or energy-efficient appliances/technologies.

Three funding options are available:

  • Upgrade your home’s energy efficiency: $7,500
  • Mortgage number two: $25,000
  • Energy rehabilitation (203(k)): between $217,000 and $625,000; area dependent

To locate an approved lender and determine your eligibility, visit the United States Department of Housing and Urban Development’s (HUD) website.

FUNDING OPPORTUNITIES FOR THE OFFICE OF INDIAN ENERGY POLICY AND PROGRAMS

This government incentive program administered by the US Department of Energy’s Office of Indian Energy Policy and Programs is a grant program that assists tribal communities in developing renewable energy and energy-efficient technologies through financial, technical, and instructional support.

The funds will be used to boost economic growth, energy efficiency, and job creation on tribal grounds.

ADDITIONAL INCENTIVES FOR SOLAR PHOTOVOLTAIC ENERGY BONDS CLEAN RENEWABLE ENERGY BONDS (CREBS)

Local, state, and tribal governments, electric cooperatives, schools, and select local lenders may apply for this loan program to support renewable energy projects.

A bondholder may obtain tax credits to offset some of their bond interest, lowering the borrower’s interest rate. The issuer is liable for the bond’s principal repayment.

However, the Tax Cuts and Jobs Act of 2017 removed the authorization of new CREBs, which means that as of January 30, 2018, the IRS will no longer accept applications or provide loans for them.