It’s only September—so why are we talking about taxes right now? Simple. If you’re interested in taking advantage of the full 30% federal solar tax credit before it starts ramping down on January 1, 2020, you need to act now! The rush to claim this lucrative incentive is extending permit backlogs and packing installation schedules all the way into the fall and winter months. In short, if you want the best chance of claiming the full 30% solar tax credit on your 2019 taxes, don't wait.
This is the last year to claim the full 30% tax credit before it begins a three year decline towards 0%. In 2020, the incentive drops to 26%. In, 2021 it drops again to
1. 30% Federal Investment Tax Credit
As mentioned above, the current 30% rate is in place through the end of 2019, so this is the last year to reap the maximum return from this lucrative incentive program! In 2020, the ITC reduces to 26% and then drops again to 22% in 2021. From 2022 onward, the residential ITC no longer exists, but the commercial ITC will remain at 10%.
While the 26% rate still sounds pretty good, it actually has a sizable impact on the payback period, extending it by a factor of several years in some estimates. When it drops to 22% in 2021 the payback period will extend yet again. So, if you're inclined to turn Arizona's most abundant natural resource into immediate energy savings, we strongly recommend grabbing the 30% rate before while it's still here.
2. $1,000 State of Arizona Tax Credit
At the state level in Arizona, not only is there no sales tax charged on the purchase of a solar energy system, but you can also receive a state income tax credit of up to $1,000 for a solar purchase. Like the federal ITC, in order to qualify for the Arizona solar tax incentive, your system must be installed before the end of the tax year you wish to file for.
3. Installation Timelines
Just as Rome wasn’t built in a day, a residential solar energy system isn’t installed overnight. From HOA paperwork to permits and utility commissioning, there are many outside entities involved with a solar installation. Your chosen solar installation partner should handle all of this for you, but each of these entities are experiencing large backlogs as people rush to claim the full incentive before it's gone. While it varies from city to city—with some permit backlogs as long as 6 weeks—we recommend locking in your solar contract before the end of September in order to ensure enough time to complete permitting, design, installation, and commissioning before the year ends.
As people rush to make the 30% ITC deadline, solar installation schedules are quickly filling up as well. We're experiencing this firsthand at Sun Valley Solar. To ensure you have enough time to qualify for the full full 30% tax credit on your 2019 taxes, start your solar project today.
With the 30% ITC coming to an end, 2019 is surely the most important year for solar in more than a
decade. Contact one of our qualified solar integrators to start your solar project today!