Congratulations: After doing the research and determining solar paneling is a good choice for your home, you’ve sifted through three or four bids and chosen a solar contractor that’s right for you. Being that it’s 2019, you stand to get your home powered with solar power at one of the best moments in the last few and next few years, as far as government aid is concerned. It just so happens that this is the last year you can reap the full benefits of one of the most widespread and lucrative financial incentives out there.
And it doesn’t end there. There’s an entire universe of financial incentives from local, regional, and federal sources that could really make a dent in how much you will have to pay for your solar panel system installation. In New York City, for example, installing solar panel systems atop brownstones is a more complicated affair than it is on homes. And the costs show it.
“Government incentives can significantly reduce those costs,” reported the New York Times about homeowner Alfred Ling, who covered the roof of his four-story brownstone in solar panels. “Mr. Ling recouped about $41,000 of his $65,000 investment through a series of federal, state and city rebates and credits.”
And in June, lawmakers in Oregon passed a bill “that would provide rebates of up to $5,000 for home systems,” according to the Portland Business Journal. “For low- and moderate-income households the rebate would be capped at 60 percent of the cost of the system, or $5,000, whichever is less.”
Before paying any amount out of pockets, be sure you’re well versed in the options at your disposal, primarily by discussing them with your experienced contractor. And it’s always smart to come prepared to those conversations. Here’s what you need to know to have an informed and productive conversation about solar rebates in 2019.
2019’s Best Government Incentive is the Residential Renewable Energy Tax Credit
And it’s the last year it will be so good. As detailed in the federal credit’s profile from the Database of State Incentives for Renewables & Efficiency (DSIRE), the credit allows you to claim the solar expenditure on your taxes.
In 2019, it still applies to up to 30 percent of your installation (that’s hard and soft costs combined). While such a discount is tempting, tax incentives apply during tax season—not before. Some contractors agree to take on the full cost during installation and wait for the rebate themselves. And after 2019, the upper 30 percent limit of the credit drops, incrementally.
- 30 percent for systems placed in service by Dec. 31, 2019.
- 26 percent for systems placed in service between Dec. 31, 2019, and Jan. 1, 2021
- 22 percent for systems placed in service between Dec. 31, 2020, and Jan. 1, 2022
As you can see, it won’t be so sweet to take advantage of the credit after 2019, making it the last best year to install a solar panel system and benefits from the federal Residential Renewable Energy Tax Credit.
DSIRE lists out ten federal financial incentives that specifically benefit residential homeowners looking to improve their lot with some solar power. Whatever the case, it’s important to have a clear understanding of how this and other incentives will apply to your present and future solar panel system costs—and your electric bill with solar panels.
Solar Rebates and Financial Incentives in 2019
We at Modernize have reported on what solar panel system installations look like in states ranging from Arizona and California to Massachusetts and New Jersey. Check the DSIRE database for your own state to see what’s in store for you (most states sport close to a hundred, if not more, incentives).
To prepare you for some research, let’s take a look at some examples to familiarize you with the best way to assess these credits and rebates and apply them to your own financial situation.
Arizona’s Residential Solar and Wind Energy Systems Tax Credit
Each year, Arizona homeowners can get up to a $1,000 credit per residence, available to taxpayers who install solar panels for their houses. More specifically, you get 25 percent back on your purchase in the form of a tax credit, up to $1,000. So if your purchase was $4,000, a quarter of that would come back to you.
California’s Property Tax Exclusion for Solar Energy Systems
California provides a “100 percent” tax exclusion for certain solar energy systems. In other words, you’re not paying taxes on any of the added value of your property. While the exclusion applies to most systems, from solar heating systems to solar roof panels, there are exceptions: “Solar pool heating systems and solar hot-tub-heating systems are not eligible,” according to DSIRE. While that could be dismaying to hot tub owners, everyone will be happy to learn this tax exemption doesn’t just apply to solar panel systems, but also to the many components that could be required as part of the solar panel installation:
- Storage devices
- Power conditioning equipment
- Transfer equipment
Notably, the tax exclusion drops from 100 percent to 75 percent for “pipes and ducts that are used to carry both solar energy and energy derived from other sources.” Check out the fine print at DSIRE’s profile for the program and learn more about California solar.
Massachusetts’s Residential New Construction Program
Since 2014, home builders in Massachusetts could receive up to $4,500 in financial incentives if their constructed home met energy-efficient features that made it “more efficient than the typical home in Massachusetts.”
There are hundreds of incentives spread over each and every single state, so you should definitely take a moment to scroll through yours. But like we shared before (and share often), it’s wise not to go at it alone. Share what you find with your contractor (or a friend or a family member). And ask questions. Ask lots of questions. There are requirements and bureaucratic obstacles built into these incentives, just like in any other program. Consult those with experience to be sure you get the most out of these programs and that you’re putting in as little as possible of your own hard-earned cash.