What Are Solar Tax Credits?
When customers decide to invest in solar for their home, one of the perks they receive is the solar tax credit. Ever since The Inflation Reduction Act of 2022 passed, customers get a 30% Federal tax credit for their system, installation costs, and energy storage units that are paired with the solar system. South Carolina customers receive an additional 25% State tax credit, making the total tax credit for their system 55%.
For example, if a customer receives a tax credit for $5,000 for their system, their Federal income taxes are reduced by $5,000. Let’s say this customer owes the IRS $2,500. The solar tax credit would be used dollar for dollar to bring the balance the customer owes to $0, and then the customer would carry forward the remaining $2,500 to the following year. Customers have 10 years to utilize the full amount.
Criteria For Claiming Tax Credits
Customers can claim solar tax credits by meeting the following criteria:
–They were the ones who used the system for the first time. (Excludes people moving into a house that has a system already installed)
–They are the homeowner where the solar system is installed
–The solar system was installed after January 1, 2017
Speak with a tax professional to ensure you meet all of the criteria to claim the solar tax credit.