At PES Solar in Florida, North, and South Carolina, clients often ask us, “Do you get a tax credit for leasing solar panels?” The federal tax credit for permanent solar installations can reduce your upfront cost, allowing you to reduce spending now and enjoy long-term solar energy savings. Below, we discuss everything you need to know about solar panel tax credits, including savings calculations, leasing eligibility, and steps to receiving credits.
What Is the Federal Solar Tax Credit?
The federal solar tax credit is a government-run incentive program encouraging homeowners to implement environmentally friendly solar solutions. Because of the Inflation Reduction Act, the Residential Clean Energy Credit recently improved, offering better savings. Each year, the amount you can receive changes:
- 2022: Systems installed in 2022 can receive a tax credit equivalent to 30% of the solar panel installation cost.
- 2023: In 2023, the tax credit percentage will reduce to 26%.
- 2034: In 2034, the credits will reduce again to 22%.
- 2035: By 2035, you will no longer be able to receive tax credits for installing solar panels. If you’re interested in solar energy, you can save the most money by installing your systems as soon as possible.
How To Calculate Tax Credit Savings
You can calculate your tax credit savings by totaling your solar panel cost (including materials, equipment, labor, and sales tax) and deducting the percentage rate based on the year you receive it.
For example, if your system costs $20,000 and you install it before 2023, you can receive a 30% tax credit equaling $6,000. By saving $6,000, your total solar system installation cost would only be $14,000.
Federal Solar Tax Credit Eligibility
To be eligible for the solar tax credit, you must meet the following qualifications:
- You must own the system.
- Your income should be taxable.
- You must install the system at your primary or secondary residence.
- You must claim the credit after the initial installation.
Do you get a tax credit for leasing solar panels? No, solar panel leases and purchase agreements (PPAs) do not qualify for tax credits. While you may not receive the credit, you can still enjoy reduced upfront costs and energy savings with solar panel leases and PPAs.
How To Receive Your Tax Credit
To receive your tax credit, you must complete and submit Form 5695. The two-page form includes a few basic questions that shouldn’t take too long. You will submit the form when you file your income taxes the following year.
Save 30% By Installing a System Today
Now that you know the answer to “Do you get a tax credit for leasing solar panels?” you can begin budgeting for your project. At PES Solar, we offer flexible financing, a convenient cost calculator, and installations for all major brands in Florida, North, and South Carolina. Call us at 800-650-6519 to schedule a consultation with PES Solar today so we can install your system before the federal tax credit percentages decrease.