To encourage Americans to use solar power, the Environmental Protection Agency and the Department of Energy run the Energy Star program, which, among other projects, offers tax credits for solar-powered systems. These are also know as "solar rebates". You can get Solar Tax Credits in Winslow and solar rebates in Snowflake as well as Show Low az and all of the White Mountains in Arizona.
Federal Tax Credits Explained
You get a 30% Tax Credit based on the price of your system. This is a CREDIT and not a deduction which is a huge difference. For example if you purchase a $10,000 dollar solar system you would automatically get $3,000.00 credit to the IRS!! So, the IRS will take $3,000.00 of your taxes owed!!! This is money you were already having to pay or did pay if you have been making quarterly payments or being withheld from your check. So, the IRS is saying you can give us the $3,000.00 if you don't get Solar but if you do get Solar then we will you spend the $3,000.00 on the system so your net cost is only $7,000. This is like FREE MONEY back to you. But, these tax credits only last until the end of 2019 and then faze out at 10% less each year until totally gone in 2021.
Arizona Tax Credits Explained
Under Arizona Tax Laws you will automatically qualify for a $1,000.00 tax credit on your state income taxes. This is a little different then the Federal Tax Credit which is base on a percentage of the total cost. In Arizona you get $1,000.00 Credit no matter the cost of the system.
IRS TAX FORMS
You will need to use IRS tax form 5695 to calculate your tax credit. Then you will subtract your credit from the totally amount owed on your 1040.
Of course you should always consult a tax professional to make sure it is done correctly.
- Q.Does tax credit apply to second homes?
- A.Yes, tax credit can be used for solar systems installed on second homes.
- Q. Do I have to use the full tax credit the first year?
- A. You have up to 5 years to fully use the tax credit.
- Q. Can I use the tax credit for my rental properties.
- A. Unfortunately you can't use it for rental properties. Only homes you live in.
- Q.When does the tax credit take effect? When I order the solar system or once it is installed?
- A.The tax credit doesn't apply until your system has been installed and fully running.