Financial Incentives Calculator
Income Tax Credit:
The system owner receives 30% back from the federal government in the form of a federal income tax credit.
- Tax credit can be applied over two years.
- There must be sufficient tax liability to offset the credit.
What this means is, if the system owner does not owe enough tax over a two year period to equal 30% of the cost of the system, they will not take full advantage of this credit.
A number of states offer cash rebates based on the size of the system ($ per watt). This is an upfront rebate that does not take into account system production, only overall size. They reward large systems, not efficiency, and are slowly being phased out.
State Tax Credits:
Many states offer state income tax credits similar to the federal rebate. These credits can either be based on a percentage of the system price, or a rebate per kWh of solar energy produced.
Many utilities will rebate home owners for the energy they produce. This rebate is usually comparable to the local rates for electricity (The national average is $0.12 per kwh). This is in addition to the cost of conserved electricity saved from a solar system, so the system owner is being paid twice for the energy they produce.
The heart of the grid-tied solar industry is net-metering. Most utilities will pay the system owner the retail rate for the excess energy they produce with their solar system. Some will "roll over" excess production credits to the next month, others will only let solar systems offset up to the amount of usage on site. Check with your local utilities to see what their requirements are for net metering.
Solar Investment Tax Credit of 2006 - 2016:
- Extending for 8 years the 30-percent tax credit for both residential and commercial solar installations;
- Eliminating the $2,000 monetary cap for residential solar electric installations, creating a true 30-percent tax credit (effective forsystems placed in service after December 31, 2008).
- There has been no cap for commercial installations. · Eliminating the prohibition on utilities from benefiting from the credit;
- Allowing Alternative Minimum Tax (AMT) filers, both businesses and individuals, to take the credit;
- Authorizing $800 million for clean energy bonds for renewable energy generating facilities, including solar.