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Tax season has never looked brighter! — how going solar can affect your tax season

Tax season has never looked brighter! — how going solar can affect your tax season

(Courtesy of Solaroo)


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Get out your W-2's, your calculators, and your favorite headache medicine. Tax season is here, once again. It's the wonderful season where you try to get your deductions to outweigh the taxes owed and come out victorious; or something like that. Speaking of deductions, one of the biggest, easiest ways to get a great deduction these days is to take advantage of the federal and state tax credits for going solar.

You've been hearing about it a lot lately. Going solar is trending faster than Justin Bieber's new hair cut because not only can it save you — the homeowner — a lot of money, but it can also help out the environment in a big way. It's a no-brainer, really. So today we have Solaroo Energy, a local solar installer, here to answer your tax questions.

Federal tax credit

The federal tax credit is the biggest incentive for going solar. It will give you a tax credit of 30 percent of the total cost of your system — including labor, permitting, engineering and many home upgrades that relate to your solar install — as long as you have a tax liability that can be offset. But, if you can't use all of the credit this year because your tax liability isn't big enough, you can carry it over to future years.

Since the ITC was extended, the 30 percent tax credit is good through the end of 2019, which will then lower to 26 percent in 2020 and 22 percent in 2021. The language also changed in the new solar tax credit stating that systems only have to "commence construction" and not be placed in service, as it has been. The federal tax credit does allow you to start your solar system and add on to it later. Kelly Curtis, director of operations of Solaroo Energy observed, "the federal tax credit is not capped, so you could start with a modest solar array, add on to it in 2016, and even add on to it again in 2019 and get a 30 percent credit each time."

Courtesy of Solaroo
Courtesy of Solaroo

State tax credit

The Utah tax credit works a little differently than the federal tax credit. Utah will give a credit of 25 percent up to $2,000, again, as long as you have a tax liability that can be offset. The state will allow you to carry the credit forward for four years. The 25 percent is capped at $2,000, so once you use it, it's exhausted and can't be used for adding to an existing system. But they sure add up. Curtis notes, "With just the federal and state tax credits, you could have up to 55 percent of your system paid for you. That definitely makes solar a lot easier decision."

For more tax credit information, contact an experienced solar professional here.

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