2019 is a very important year pertaining to residential energy incentives in California. The Investment Tax Credit (ITC) grants a 30% tax credit to homeowners for installing solar panels before 2020.
As you can see from the graph, getting a solar energy system installed in 2019 grants the maximum 30% solar tax credit before stepping down to 26% in 2020. The federal government will be offering:
The date that your solar panel system is approved to operate determines the year you can claim your tax credit. Please ensure that your roof is in excellent condition prior to installing a solar system.
The California solar tax credit for solar does not have a maximum limit. You can still claim the full 30% California solar tax credit without having to worry about a limit. Whether your solar panel system — installation included — costs you $10,000 or $1,000,000.
This tax credit allows up to 30% of the total cost of the system in 2019. If you have a huge tax bill, the credit can be taken all at once or you can utilize the credit over multiple years. For example, if your solar panel system costs $18,000, a 30% tax credit would be $5,400. If you owe $4,000 in taxes for 2019, your tax bill will be reduced to zero, with a remaining $1,400 tax credit for your 2020 and future returns. This IRS solar tax credit comes in real handy when tax season rolls around!
Now to put this in perspective, if a homeowner waited until 2020 to install their solar panel system the tax credit received would be diminished. Take the same example above $18,000 solar panel system but now you will only receive 26% of the tax credit back, equaling $4680. Owing $4,000 in taxes would still cancel out your tax bill but you are only left with $680 for the next year. A whopping $720 is lost because of not taking advantage of 2019’s 30% solar tax credit.
Filing to get Investment Tax Credit from installing solar panels is a simple process.
In order to qualify for the credit, you have to own your solar panels. Leasing the panels or being part of a power purchase agreement will not grant you the ITC credit.
Consult your tax advisor for more information on how to claim your 2019 tax credit.
Before you can claim the California solar credit — like most credits, rebates, or deals — there are eligibility requirements. Whether you’re incorporating solar into your residence or your business. Below is a list of the requirements that make you eligible for the Solar Investment Tax Credit: Solar pool heating does not qualify for the solar tax credit. It must be a PV system
If you’re looking to claim your solar investment tax credit on the current tax year, then you will need to consider the time it takes to get the proper permits, the installation time, and the “go ahead” from the utility company to flip the switch on your solar panel system. This process can take upwards to 10 weeks.
People often ask if you are able to claim the solar investment tax credit for energy storage. The answer is YES you can! The main requirement is that you own your solar energy system. Depending if you are installing energy storage on a residential or commercial property will determine the amount of tax credit received.
Energy storage for residential is eligible for the credit, as long as the batter is charged by solar energy system on-site. If you do not have solar installed and utilize the grid to charge the battery, it will not be eligible for the ITC credit.
Commercial properties tax credit works in a different matter compared to residential properties. The energy storage system is eligible for the credit as long as the battery is charged by a renewable energy system more than 75 percent of the time. The tax credit amount is determined by how often the battery is charged by a solar energy system. To get the full tax credit amount, the battery needs to be charged by renewable energy at 100% of the time. If the battery is charged by renewable energy less than 100% of the time but more than 75% it will receive that portion.
If the battery is charged by a solar energy system 85% of the time, you will only receive 90% of the 30% ITC credit resulting in 27% (90% x 30% = 27%). If you paid $6,000 to install your energy storage battery system, you would be eligible for a $1620 tax credit ($6,000 x 27% = $1620).
INCENTIVES OFFERED BY THE STATE OF CALIFORNIA
Currently there are no longer incentives or rebates offered by the state of California for installing a solar panel system. The good news is that there is a rebate for installing a energy storage system called the Self-Generation Incentive Program (SGIP)! This can be claimed alongside the California solar tax credits.
Recently California’s Governor Brown signed SB 700. This adds approximately $800 million in additional funding for SGIP and extends the program through 2025.
The California energy storage rebate program was established in 2001. Until recently, applying for SGIP was a difficult process, especially for residential customers. The rebate previously worked by making the program funds available on a specific day, and most of the funds were allocated to big industrial-sized energy storage projects, leaving very little left over for homeowners looking to store their solar energy.
For homeowners who are customers of either SDG&E, PG&E, SCE and SCG are eligible for an incentive for up to $400 per kilowatt-hour when you install a home battery. This huge incentive has the ability to cover most of your battery costs. How big the battery is will determine the value you receive per kilowatt.
For example, if you were to install a Tesla Powerwall 2 with a 14 kWh capacity. Under SGIP, the first 10 kWh will recieve up to a $400/kWh incentive, and the remaining is eligible for a $200/kWh incentive. This is worth up to a total of $4,800 towards the Powerwall equipment, which is worth $5,500!
The solar panel California tax credit and energy storage rebates really add up to a significant amount when getting a new system installed!
WHY CHOOSE SOLARTECH?
It pays to do your homework when choosing which solar panel company you will go with. There are main key factors at play, which will aid you in your decision including:
At SolarTech, we have been installing solar since 2001, have an abundance of happy customers, utilize the highest quality / efficient solar panels with a 25-year production / workmanship warranty and offer $500 for every solar energy customer referral that installs with us! Whoever you choose to do your solar installation, ensure they honor their installation with sufficient solar repair and service in case anything goes wrong down the road!