Solar Panels: Using a Bright Idea to Bring You Cool Tax Benefits
Adam Ciboch | June 28, 2011Say good-bye to your electricity bill, at least potentially. Increasingly, homeowners are turning to solar energy as a means to save money. Not only is it an environmentally friendly option, it could also potentially save you a lot. Think tax rebates, no sales tax on solar panel-related expenses and more. Who wouldn’t want that?
The federal government has been trying to implement incentives for more responsible energy use for the past five years. The first tax break of its kind was the Energy Policy Act in 2005. People who opted for renewable energy were awarded it. Today’s world has definitely changed a lot, since there used not to be many incentives to induce people to switch to renewable energy before this act, if any at all.
Homeowners can receive a tax credit of up to $2000 or 30% of what they invested in purchasing solar panels as a result of the Energy Policy Act of 2005 alone. It was extended back in 2008 to cover almost any home in the United States that primarily makes use of solar energy, although it originally only benefited homes in existence from 2005-2007. Homes built through January 2009 were included.
The Emergency Economic Stabilization Act was passed in 2008 in addition to this act. Solar panels are just one of the ways it provides people with even more incentives for using solar energy. It also adds more credit for people who intend to do home improvements in 2009 or beyond, as well as extending the Energy Policy Act of 2005. This bill favors the 30% rebate on investments in solar energy and removes the $2000 tax credit maximum. It is even retroactive in some instances.
Individual states also may have state tax incentives for using solar panels on your home. Some of these states include New Mexico, Florida, Vermont, Minnesota, Washington, New York, Texas, Virginia, Arizona and California. While some states have tax rebates, others carry no sales tax on solar panel equipment costs. It is certainly worth looking into, if you’re considering going the environmentally friendly route. Solar panels can be installed by professionals or can be purchased in do-it-yourself kits. Either way, the tax incentives are well worth the switch.
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