The Solar Federal Tax Credit

Before you install a solar system, and before you apply for the federal tax credit incentive, it is best to have a word with your tax attorney or accountant first. Although the U.S. offers a 30 percent incentive under the America Recovery & Reinvestment Act of 2009 for solar system installation, not every solar system qualifies for the tax credit incentive (e.g. solar pool heaters). Others have conditions to fulfill, such as ensuring that the solar water heating systems are performance driven, which means they must cater to at least half of the premises' hot water needs.

At least for now the cap of $2,000 has been lifted from residential home solar system installations. Although the tax credit is offered, you can only enjoy it when the system is in use and when you pay your taxes for that year. Hence, you will have to pay your installer this 30 percent upfront. Commercial buildings are also eligible for this tax credit of 30 percent, together with a system cost’s accelerated depreciation. This percentage is an all inclusive cost tax credit. If the credit is more than the payable taxes, the outstanding amount can be carried forward to the subsequent years - until December 2016.

Financial incentive programs apply such a varying range of methodology for solar system installations that they are bewildering, though they are required to be put into place to encourage an increased usage of clean energy and to reduce the earth’s airborne pollutants that can adversely affect our health and climate conditions. These incentives also encourage a strong support of distributed generation of energy that allows energy sources to be closer to the home. They also assist in solving the growing depletion of electricity supply and transmission of electricity.  Distribution infrastructure issues can be resolved too.

With these issues in mind, solar or renewable energy is a good tool for us to adopt to ensure a continuation of our civilization and the prosperity of our future on planet Earth. But it will not get a good breakthrough if fossil fueled power prices are not felt deeply by consumers.