Tax Day has arrived, which is good news for those expecting a refund — including taxpayers eligible for tax credits after installing solar panels. With refund season underway, experts are breaking down how these sizable government incentives work and how much they could save you.
The scoop
In a recent Instagram video, the solar experts at EnergySage explained how exactly clean energy government incentives work. The federal tax credit for going solar covers 30% of the entire cost of swapping to clean energy.
"That includes materials, labor, permitting, and all other fees," an EnergySage spokesperson said in the video.
You'll claim this tax credit when you file for the year you installed the solar. The credit reduces your tax liability, meaning it can lower the amount of taxes you owe.
If you've already paid enough in taxes throughout the year, you may receive a refund for the tax credit amount. But if you owe on your taxes, the credit will reduce that amount. If the full 30% credit isn't used in the current year, the remaining amount can be carried over to the next year.
How it's helping
Solar power is one of the least polluting energy options available to homeowners, reducing reliance on the grid, which is largely powered by dirty energy sources. But making the switch can be pricey. EnergySage estimates that the average cost of installing solar panels is around $29,000.
That's where Inflation Reduction Act incentives come into play. After applying the 30% federal tax credit, EnergySage says the average cost of installing a system drops to about $20,500 — and that's before factoring in additional state or utility incentives.
After saving with the tax credit, it takes about seven years to earn back the money you'll spend on a solar panel installation. From that point on, the electricity from your solar panels is effectively free.
Aside from breaking down the complicated legislation in video form, EnergySage can also help you claim this tax credit and rebates. The free online resource quickly and easily estimates your potential solar savings and helps you compare quotes to get the best deal.
What everyone's saying
Countless homeowners have benefited from going solar, with many of them using the credit to help cover the cost.
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The cost 💰 "The tax credits really make it a much nicer deal than it would be," one homeowner said.
While you can save money by going solar, the future of clean energy tax credits and rebates is uncertain. President Donald Trump has proposed dismantling the IRA, which could reduce or eliminate government incentives for climate-friendly home upgrades, including solar panels. While any significant change to the IRA would require an act of Congress, the program's future remains in question. Given this uncertainty, taking advantage of IRA incentives now could save you thousands of dollars.
As EnergySage advises, "Don't miss out on the savings."
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