Solar Tax Credit going down in 2021
The Solar Investment Tax Credit, which allows homeowners to deduct a percentage of the total cost of a new home solar panel system off their federal taxes, is set to expire in January 2022.
Currently, the tax credit is at 26% of the cost of a new solar panel system, down from 30% in 2019. It is scheduled to decrease in 2021 to 22% before ending on Jan. 1, 2022.
Unless Congress renews the tax credit, this incentive will end permanently and that could mean major changes for solar businesses and homeowners who are considering installing a solar panel system, according to a news release from Shine Solar.
The past 10 years have seen growth in the solar industry with prices falling by 70% and technological advancements that now make solar more and more efficient every year. They are so efficient, Shine Solar comments, that homeowners can sell power back to their electric utilities. This has translated into an average annual growth rate of 52% and has created hundreds of thousands of good paying jobs while pouring over $140 billion worth of investment into the U.S. economy.
Yet, for all its success, solar only accounts for only 2.5% of total electric generation in the U.S. This means there is still a lot of room for growth. Without the support of the ITC, this potential growth could be curtailed.
“Of course, we would like to see the ITC renewed,” Shine Solar CEO Nick Gorden. “Not renewing the ITC would have the effect of substantially raising prices on home solar panel systems overnight and I don’t think that as an industry we are ready for that yet. We are just at the beginning of transforming solar into a mainstream and affordable option for homeowners. It’s going to take more time for the industry to mature.”
Regardless, homeowners who are considering installing a solar panel system have just over a year to decide before prices are expected to go up and just over two months before the ITC drops to 22% from 26%.
Shine Solar is a solar installation and energy services company based in Rogers and operates throughout Arkansas, Oklahoma, Missouri.