Changes in the Federal Solar Tax Credit in 2016

Distinct Homes LA · October 14, 2015

solar tax creditAs a way of supporting deployment of solar energy in the United States, the Federal Government has put The Solar Investment Tax Credit (ITC) as a policy mechanism overseeing the success of solar projects in America. Come December 31, 2016, the ITC for residential and commercial solar system will expire. There is a huge debate on whether the deadline will be extended or whether it will expire for good. Before looking at any changes that may occur, let’s take a look at the facts.

Quick Facts of Solar Investment Tax Credit (ITC)

  • ITC is a 30% federal tax credit for solar systems installed on residential and commercial properties.
  • ITC has provided a platform for companies to develop long term investments that promote competition and technological innovations. This has lowered the costs of goods for consumers.
  • The multiple-year extension has helped solar installation in the United States to grow by over 1,600% since its implementation in 2006.

What are the Changes Expected in 2016?

As of now, both residential and commercial properties are given 30% tax credits on solar installation placed before 31st December 2016.

After the expiry of the deadline, commercial property credits will drop from 30% to 10% while residential properties will drop to zero. This will be a drastic drop that will make both commercial and residential developers spend a lot of money in solar installation.

Unless the US Congress moves in to extend the deadlines, the changes outlined above will come into effect on 1 January, 2017.

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