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The Federal Investment Tax Credit is still in place for solar now and has been expanded through the end of 2024. It is 26% in 2021, 26% in 2022, 22% in 2023, and 10% in 2024 for commercial properties only. For more information about how the tax credit works and has changed, you can visit SEIA.org (https://www.seia.org/initiatives/solar-investment-tax-credit-itc) for more; however, we will do our best to explain it here.

First, it is important to consult your tax professional when determining how the federal ITC will impact your specific situation. Energy advisors are not tax professionals, nor will they pretend to be, and each situation is unique.

There are a few things to keep in mind as it comes to how that tax credit can be used in conjunction with a solar panel installation. First, you can apply that tax credit to other improvements in the home that coincide with a solar system. For example, if you remove a few trees or cut back some limbs, you can capture the tax credit on any dollars spent there. The same can be said with a roof replacement (only for portions to be covered by solar), insulation installed through that specific solar company, EV charging units installed (in conjunction with solar), battery installations (when powered by solar), as well as a few other smaller ticket items.

When those improvements are paid for by the solar company itself, you can capture the federal tax credit on those additional pieces. As mentioned above, it is critically important to speak with a tax professional and/or your financial advisor to see how this applies to your specific situation. When discussing options with an energy advisor, they will often show you proposals that separate out the tax credit. That way, you can understand the full dollar amount to be paid upfront and work with a financial professional to realize the full potential your tax situation presents with the investment.

Please note that with pending legislation, it is entirely possible that the specific tax implications could change. We will try to keep this article updated as best as possible, but you can schedule a conversation with an energy advisor to stay up to date.

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