1/19/2016 9:09:19 AM
There is great news for consumers planning a solar energy system in the next few years, as well as for businesses and workers in the solar industry.
Last month Congress extended the 30 percent personal federal tax credit for residential solar energy systems for three years with passage of the Consolidated Appropriations Act., signed into law by President Obama. It extends the Residential Renewable Energy Tax Credit for solar until Dec. 31, 2019, followed by a two-year step down in the credit. The tax credit was scheduled to expire on Dec. 31, 2016.
The extension means “a taxpayer may claim a credit of 30 percent of qualified expenditures for a solar system that serves a dwelling located in the United States that is owned and used as a residence by the taxpayer.” The system must be placed in service by Dec. 31, 2019. Expenditures include labor costs for onsite preparation, assembly or original systems installation, and piping or wiring to interconnect a system to the home.
The tax credit value will decrease to 26 percent for systems in service in 2020 and 22 percent for systems in service by 2021.
The tax credit extension covers solar electric (photovoltaic) and solar thermal technologies (solar water heating) only. It was not extended for residents applying other technologies such as wind, fuel cells, and geothermal heat pumps. The credit does not apply for solar water heating for swimming pools and hot tubs.
The federal tax credit, combined with other incentives, makes solar a more affordable clean energy option for many people. A taxpayer who installs a solar energy system and receives the 30 percent tax credit may also qualify for other incentives, such as the Made in Minnesota Solar Incentive Program or Xcel Energy’s Solar*Rewards Program.
Details are available at Residential Renewable Energy Tax Credit. Congress also extended the Business Energy Investment Tax Credit for businesses that install solar technologies. To learn if your utility offers a rebate or other incentive for a solar energy system, and for information on other incentives for renewable energy systems and energy efficiency upgrades, visit the Database of State Incentives for Renewables & Efficiency at www.dsireusa.org.
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Minnesota Energy Tips is provided twice a month by the Minnesota Department of Commerce, Division of Energy Resources. Contact the division’s Energy Information Center at firstname.lastname@example.org or 800-657-3710 with energy questions.