Federal Solar Investment Tax Credit (ITC)
The Federal Solar Investment Tax Credit (ITC) is a financial incentive from the U.S. federal government that allows homeowners and businesses to deduct a significant percentage of the cost of installing solar energy systems from their federal taxes. The ITC is designed to encourage the adoption of renewable energy by making solar installations more affordable.
Key Points of the Federal Solar ITC:
- 30% Tax Credit for Solar Installations
- Homeowners in Chicago can claim a 30% tax credit on the total cost of their solar energy systems, including solar panels, inverters, and battery storage systems (like the Generac PWRcell), as long as the system is installed and operational.
- Eligibility for Energy Storage
- The ITC covers energy storage systems if they are installed in conjunction with solar panels or even if added later. This makes it an attractive option for those looking to enhance energy efficiency and reliability.
- Residential and Commercial Eligibility
- Both residential and commercial properties in Chicago are eligible for the ITC. This includes single-family homes, multi-family dwellings, and commercial buildings.
- No Cap on Credit Amount
- There is no maximum limit on the amount you can claim, allowing significant savings on larger installations.
- Installation Deadline
- The ITC remains at 30% through 2032, with planned reductions to 26% in 2033 and 22% in 2034. This timeline encourages early adoption to maximize savings.
- Claiming the ITC
- To claim the ITC, homeowners must file IRS Form 5695 with their federal tax return for the year in which the solar installation is completed.
How the Federal Solar Investment Tax Credit (ITC) Works:
If you install a solar energy system (e.g., solar panels and/or a battery storage system) in 2023 at a total cost of $20,000, you would be eligible for a $6,000 tax credit (30% of $20,000). This amount would be deducted from your federal tax liability.
For example:
- Cost of solar installation: $20,000
- 30% tax credit: $6,000
- Total tax liability reduction: $6,000 off your federal taxes
If your tax liability for the year is only $5,000, you can roll over the remaining $1,000 to your taxes the next year.
What Does the Federal Solar Investment Tax Credit (ITC) Cover?
The Federal Solar ITC covers a wide range of costs associated with solar energy and energy storage systems, including:
- Solar Panels and PV Cells
- Inverters and Charge Controllers
- Energy Storage (Battery Systems like Generac PWRcell)
- Solar Mounting Hardware and Racking
- Electrical Wiring and Equipment
- Labor Costs for Installation
- Permitting Fees and Sales Taxes
- Consultation, Design, and Engineering Costs
Local Incentives in Chicago, IL
In addition to the federal ITC, Chicago residents may have access to additional state and local incentives that can further reduce the cost of solar installations, including:
- Illinois Solar Renewable Energy Certificates (SRECs)
- Illinois offers SRECs, which provide additional income based on the amount of electricity generated by your solar system. This can significantly enhance your return on investment.
- State Grants and Incentives
- Various state programs and grants may be available to help offset installation costs, particularly for low-income households or community solar projects.
- Net Metering
- Illinois has a net metering policy that allows solar system owners to receive credits for excess electricity generated, further reducing energy bills.
Why Choose GSHA Services, LTD?
As a Generac Elite Authorized Dealer in Chicago, GSHA Services, LTD is equipped to help you navigate the federal ITC and any local incentives, ensuring you maximize your savings on solar installations. Our expert team can guide you through the entire process, from choosing the right system to installation and ongoing support.
Get Started with Your Solar Project
Transform your energy use with the Generac PWRcell system. Enjoy lower energy bills, reliable backup powerIf you’re considering solar energy for your home or business in Chicago, now is the perfect time to take advantage of the Federal Solar Investment Tax Credit and local incentives. Contact GSHA Services, LTD today at (224) 258-0510 to learn more about how we can assist you in making the switch to solar energy and securing significant savings!