There are many great reasons to install solar panels on your home. They can save you money, make better use of renewable energy, and you can even sell excess energy back to the power grid where you live for real money. Perhaps one of the greatest benefits to installing them, however, is the tax credit for solar panels that the United States Government offers to those with solar panels.
To understand how this benefit works, we need to make clear the difference between a tax deduction, and a solar tax credit.
Tax Deduction
A tax deduction is an amount that reduces the gross earnings upon which your tax amount is based. Generally, the most common deductions are interest paid for a mortgage, personal deductions, some medical bills and business expenses.
Solar Tax Credit
A solar tax credit, like any tax credit, is like getting a coupon for your tax liability. When you purchase certain products or services that benefit the country as whole, like child care so you can work and contribute to the gross national product, you are given a write off of your tax debt. In the case of tax credit for solar panels, the government sets an amount that you can receive credit for and when you compute your taxes for that year, you can remove that amount, dollar for dollar, from the amount you owe.
If you’re due a refund, the solar tax credit can increase the number of dollars you’ll get in your refund. It’s like getting a government rebate for doing the right thing; in this case, installing solar panels.
The government of the United States has taken a stand on climate change and the consumption of fossil fuels for energy. They are looking for more ways to encourage the citizens of America to use less energy, and more renewable energy, like solar panels, by offering benefits to those who are willing to invest in the products that reduce energy costs.
Besides tax credit for solar panels, you can also receive a tax credit when you replace your household appliances with Energy Star rated appliances. If you upgrade your windows and doors, there is another tax credit available.
Solar panels are one of the best ways to receive the tax credit offered by the United States government, because the solar panels will last for many years, and when the neighbors hear how much money you’re saving… perhaps they will get that solar tax credit next year.
Update: Los Angeles DWP relaunches Solar Incentive Program in September, 2011.
Did you know that you can be compensated on a state and federal level for going solar? Find out about