Energy needs are among the top reasons that the world is driven to spend billions in infrastructure, research, and engineering each year. We need power for every city to function, for critical healthcare to work, and for our daily lives to go uninterrupted. Unfortunately, fossil fuels have long been the solution of choice - despite their nonrenewable nature and the growing environmental and ecological repercussions that sourcing and supplying these fuels impose globally.
Renewable energy solutions have been on the cusp of changing this reality with improving technology and significantly lower prices in the long term. However, people remain skeptical of switching to clean energy – which is why governments have elected to offer incentives that benefit homeowners and businesses that choose renewable energy solutions.
What Are Federal Tax Credits?
Federal tax credits are a type of incentive provided by the U.S. government to encourage individuals and businesses to invest in activities that are beneficial to society. These tax credits are then deducted from the amount of taxes owed to the government by these people. There are different federal tax credits available for people - each with its requirements and eligibility criteria. Some examples of federal tax credits include the Earned Income Tax Credit for low-income individuals and families. This reduces the amount of taxes owed or results in a tax return. The Child Tax Credit is another example in which parents or guardians with dependent children receive a credit of up to $2,000 per child under the age of 17.
These federal tax credits are aimed at helping individuals; however, the Energy Efficiency Tax Credit provides an incentive to promote a sustainable future for us all. The installation and usage of clean energy solutions earn you federal tax credits. One of the most lucrative and growing sectors of renewable energy is the use of solar power.
What Is The Federal Solar Tax Credit?
The National Renewable Energy Laboratory report stated that PV solar panels on just 22,000 square miles of the nation’s total land area could supply enough electricity to power the entire United States. The solar power industry has grown exponentially over the past few decades – and is only getting started. According to Fortune Business Insights, the global solar power market is projected to grow from US$ 234.86 billion in 2022 to US$ 373.84 billion by 2029.
The federal solar tax credit is a tax credit available to homeowners and businesses that install solar PV energy systems. Originally enacted in 2006, it has been extended several times The credit allows taxpayers to deduct a portion of the cost of installing a solar energy system from their federal taxes.
The Office Of Energy Efficiency & Renewable Energy proclaims that solar PV systems installed in 2020 and 2021 are eligible for a 26% tax credit. An extension of the Investment Tax Credit (ITC) was passed by congress in August 2022, raising the solar tax credit to 30% for any installations done between 2022 and 2032 - solar PV systems installed on or before December 31 of 2019 were also eligible for a 30% tax credit. The solar tax credit will decrease to 26% for any systems installed in 2033 and then be further reduced to 22% for systems installed in 2034. Unless congress renews the solar tax credit, it expires in 2035.
Am I Eligible To Claim The Federal Solar Tax Credit?
There are a set of guidelines set out by the Office Of Energy Efficiency & Renewable Energy that make you eligible to claim a solar tax credit. Accordingly, you may claim the tax credit if:
- Your solar PV system was installed between the 1st of January 2017 and the 31st of December 2034.
- The solar PV system is located at a residence of yours in the United States.
- You either own the solar PV system (you purchased it with cash or through financing, but you are neither leasing the system nor paying a solar company to purchase the electricity generated by the system) or you purchased an interest in an off-site community solar project and the electricity generated is credited against - and does not exceed - your home’s electricity consumption.
- The solar PV system is new or being used for the first time. The solar tax credit can only be claimed on the “original installation” of the solar equipment.
What Expenses are Included?
Certain expenses are unavoidable when looking to invest in a solar PV installation. These costs vary depending on the size of the system, the type of panels used, the complexity of the installation, and the location of the installation. Fortunately, a solar tax credit takes care of the majority of this expenditure.
A brief overview of the expenses included by the solar tax credit is:
Solar PV panels or PV cells
Forbes has suggested that the average cost of solar panels in the U.S. is about US$ 16,000, or between $3,500 to $35,000 depending on the type and model you choose.
Contractor labor costs
The work put in for onsite preparation, assembly, or installation. This includes permitting fees, inspection costs, and developer fees.
This includes the wiring, inverters, and mounting equipment needed to set up the system.
Energy storage devices
Those that have a capacity rating of 3 kilowatt-hours (kWh) or greater (for systems installed after December 31, 2022). If the storage devices are installed in a subsequent tax year to when the solar energy system is installed it is still eligible, however, the energy storage devices are still subject to the installation date requirements.
Sales taxes on eligible expenses
Any taxes procured in the sale of these eligible expenses.
Now that you know what the solar federal tax credit covers, how do you go about claiming the incentive?
How do I claim the federal solar tax credit?
To claim a solar tax credit, please follow the steps laid out by the Office of Energy Efficiency & Renewable Energy:
- Consult with your tax advisor to determine if you are eligible for the tax credit and that you have, or will have, a sufficient amount of tax liability to utilize the credit.
- Complete IRS Form 5695. Further instructions on how to fill out this form are given here
- Attach the 5695 Form to your federal tax return and claim the solar tax credit by filling out the appropriate sections of your Form 1040 federal tax return.
Always be sure to consult with a tax professional or accountant to ensure that you are eligible for the ITC and that you are correctly claiming the credit on your tax return.
Federal solar tax credits make it that much easier to invest in renewable energy solutions and allow you to forget about all the red tape and focus on what’s important. Choosing the right solar-powered solution is the only obstacle in your path to a clean and sustainable lifestyle – and you need to look no further than right here. The Mango Power solar generator is the answer to all your renewable energy needs.
The Benefits Of Using the Mango Power Solar Generator
Mango Power is a brand built on the idea of providing clean and renewable energy solutions for homeowners – inside and outdoors. The versatile and impressive Mango Power E solar generator is sleek, and portable, and features a powerful 3.5kWh capacity that allows you to take your energy wherever you go and always have enough to keep all your devices, and most outdoor appliances, powered up. The Mango Power E boasts a series of benefits that include:
The Mango Power E works to reduce the amount of greenhouse gas emissions and air pollution in our environment. Every full recharge of the device provides a 0.79 kg reduction in carbon emissions - equivalent to the amount of carbon captured by 48 trees in a day. The power used is sustainable and helps our planet.
Solar generators reduce the amount spent on utility bills by relying on the best free energy resource we have – the sun. The Mango Power E solar generator is a lifelong investment that will pay for itself eventually or pay for itself immediately with federal tax credits from the government.
The Mango Power E is designed for maximum mobility with 2 wheels to make it as easy as carrying around a suitcase. The structure is convenient for outdoor activities - such as RV trips or camping.
Mango Power E adopts the world’s best CATL ultra-durable LFP battery cells to ensure the fastest charging speeds. Allowing the device to reach an 80% recharge within just 1 hour.
The Mango Power Union is also a great way to integrate solar energy into your home. It comes with 2 built-in PV inverters that support 2 times the MPPT input (12V-250V). You can connect the Mango Power Union with both roof solar systems and portable solar panels. Mango Power allows you to use solar power exclusively with any device by simply choosing the backup power and economical modes on the Mango Power App.
Choose to invest in Mango Power solar generators for a variety of benefits and to improve your home’s energy supply - ensuring a sustainable lifestyle for you and your loved ones today. Learn more at mangopower.com