Do 2023 Solar Tax Credits Make Going Solar Worthwhile for Homeowners?

2023 Solar Tax Credits: Taking Advantage of Residential Solar

The Federal Solar Tax Credit has been a significant factor in many homeowners choosing to have solar installed on their homes for several years. But the credit does occasionally change. For instance, in 2020, the solar tax credit was 26% and it was originally supposed to drop to 22% in 2023 before being eliminated in 2024.

But that all changed in 2022 when the Biden Administration passed the Inflation Reduction Act. As part of that Act, the Federal Solar Tax Credit for 2023 was increased to 30% and it will remain at 30% through the end of 2032 when it will drop to 26% in 2033.

So, despite being raised, a lot of homeowners are still wondering – do 2023 solar tax credits make going solar worthwhile?

How the Solar Tax Credit Works

Before you can determine if the tax credit will be enough to convince you to go solar, you should first have an understanding of how the credit works. The most important thing homeowners need to know is that this is a tax credit that they will receive on their federal income taxes. It is not a direct payment.

The credit is a dollar-for-dollar credit equal to up to 30% of the cost of the solar installation. The credit allows you to use a part of the cost of your solar power system to reduce the amount that you owe in income taxes for the year.

Another important thing to know about the solar tax credit is that it is only available to homeowners who purchase or finance their systems. Homeowners who lease their solar panels or sign PPAs are not eligible for the credit.

How Much Can the Solar Tax Credit Save Me?

Every solar installation is different. They can vary wildly in size and scope, and in the quality of the equipment that’s used. Some may also have battery storage systems whereas others may not. This, of course, means that installation costs can also vary.

Because of this, the amount of your tax credit can be substantial. In fact, according to the U.S. Department of Energy, the tax savings on an average sized solar installation in 2023 can be expected to be around $7,500.

So, if your tax credit is equal to $7,500, then that will be the amount that will be deducted from your taxable income for the year.

Does the Solar Tax Credit Make Going Solar Worthwhile in 2023?

At 30%, the solar tax credit is one of the best ways a homeowner can reduce the total cost of their solar system. While a homeowner will still be essentially paying for their systems in full, the tax credit will reduce their taxable income for that year by nearly a third of the cost of their installation. As shown above, that can be a substantial amount.

This also doesn’t take into account any possible rebates or incentives being offered by the homeowner’s state, city, or township.

If you’ve been putting off going solar because you weren’t sure if the tax credit was enough to make a difference, then now is the time to go for it. The solar tax credit has never been larger, so take advantage of the savings and get the solar system you’ve always wanted for your home.

Contact your local solar installer today for a consultation and a complete review of just how much you can save with the 2023 solar tax credit.

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