April is just around the corner, which means it’s time to stop procrastinating and finally file away our taxes. While no one (to our knowledge) sincerely loves tax season, solar can actually make it fun and exciting. With federal and state tax credits, you can save on your taxes while reaping the benefits of clean, affordable energy.
There have been some changes and confusion surrounding the solar industry with the recent announcement of tariffs on certain imported panels. You can read our not-so-scary assessment of the tariffs in this recent blog post. It’s easy to assume that this change has dramatically reduced the ROI calculation for a solar purchase, but in truth, there are still great incentives in place that will dramatically offset the cost of going solar.
Below are three of the main solar incentives available to pretty much anyone who adds solar to their home in the state of Arizona. Some local utilities also offer rebates for implementing certain new technologies as well, although those are rare. For specifics in your utility district, It’s best to consult a local solar provider.
1. Federal Investment Tax Credit (ITC): The ITC is a great way to make your solar energy system more affordable. With this incentive, you can take a tax credit off your personal income tax return for 30 percent of the solar system cost with no cap. This can be taken all in the first year, or spread it out over the maximum of five years.
The ITC is scheduled to ramp down starting at the end of 2019, so it’s important take advantage of the higher incentives while they last. This 30 percent credit is available through 2019 before it lowers to 26 percent in 2020. In 2021, it drops down to 22 percent and then ends permanently in 2022. The ITC only applies to systems purchased with cash or through traditional financing. With a lease, the tax credit goes to the lease holder, rather than the homeowner. Consult your solar installer for details.
2. 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. 0% down leasing options: Leases are a great option if you don’t want to commit to an initial down payment. Common to most capital leases, there are options for no money down, or options with down payments that help reduce the monthly costs. Ultimately, the goal is to negotiate lease payments that are lower than your current utility payments.
For some retirees, leasing a solar energy system is an attractive option since you likely have minimal tax liability and would not benefit from the federal ITC (with a lease, the lease holder receives the tax credit).
If you’ve been thinking about making the switch to solar, now is the time to take advantage of our "friends and family" promotion and save up to $3,000 on a solar energy system! We invite you to contact one of our solar experts for a custom solar quote. If you aren't quite ready for a quote, you can download our complimentary whitepaper: Is Solar Right for You?