Solar Tax Step Down
March 7, 2019

As discussed in our recent blog post, one of the biggest reasons to go solar in 2019, is the impending step down of the federal Investment Tax Credit (ITC) which has hugely benefited those going solar in recent years. While we spoke briefly about the tax credit and what this could mean for consumers going forward, we think it’s important to take a deeper look at the ramifications of these tax credit changes. So, let’s examine how the federal solar tax credit has boosted the industry in recent times, and what changes could occur as a result of its impending reduction.


What changes are coming?

Currently the federal solar tax credit, or investment tax credit (ITC), allows for a 30% deduction of the cost of solar system installation from your federal taxes. For a lot of new solar customers over the past few years, residential or commercial, this tax credit has been a huge factor in their decision to go solar. Unfortunately, 2019 is the last year where the full 30% deduction will apply. In 2020, it will go down to 26%. In 2021, its down even further to 22%. Then, once we get to 2022, it’s down to a mere 10% - ONLY for commercial systems. That is to say, that once we hit 2022, there is no federal solar tax credit for residential solar systems. With the step down on this important solar tax credit coming into effect at the start of next year, there are a number of implications for the solar industry, and for those considering investing in a solar array for their home or business.


Though these changes are a disappointment to many involved in the solar industry, it’s important to remember that things were looking even worse just a few short years ago. Originally, back at the end of 2015, it was looking like the ITC would drop all the way down to 10% until a decision was made to extend the tax credit. Back around this time, we saw a rush of solar projects occurring as people sought to take advantage of the tax credit while it was at its peak. It won’t be surprising if something similar occurs this time around, with 2019 being the last year consumers can avail of the full 30% reduction.


What do these changes mean for the industry?

Although the ITC is certainly a huge draw, and probably one of the biggest incentives to go solar in a financial sense, the benefits of solar are far-ranging and industry growth is likely to continue in spite of this step down. Investment in the development and research of solar technology will continue to result in breakthroughs, leading to more efficient systems and lower costs for the end user. In time, it’s also possible that industry pricing will adjust to reflect the reduction, and eventual absence, of the federal solar tax credit.


So, the industry will endure as it always has, pushing toward a renewable, sustainable future. However, that doesn’t detract from the opportunity that the extension of this solar tax credit has given consumers. To maximise your financial returns from the installation of a solar system, 2019 is the best time to make the move and install a solar panel array for your home or business. To ensure eligibility for the last full year of the ITC, it’s best to get moving on a solar project sooner rather than later. Between financing, planning, and permitting, there can be a few weeks between signing the solar contract and the actual day of installation, so it’s best to begin your solar journey nice and early to make sure you get the full 30% reduction come tax time.


To learn more about how you could benefit from the solar tax credit in 2019, don’t hesitate to contact YSG Solar or call the office at 212.389.9215.


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By Shane Croghan




Featured Image: Saintfevrier at Greek Wikipedia [Public domain], via Wikimedia Commons