Over the past couple of years, there have been changes to the tax incentives that homeowners can utilize when making the switch to solar. Using the tax credits that are currently in place will reduce the cost of switching to solar by thousands of dollars.
Let’s take a look at what the tax incentives for solar are in 2019 for Park City homeowners and how much longer they will last.
Federal Solar Tax Credit
The federal tax credit for 2019 is 30% on the total cost of a solar array.
Back in December of 2015, Congress voted to extend the federal solar tax credit until 2021. The extension was structured to diminish the federal tax credit to 22% in 2021 and 0% in 2022 except for commercial projects that would maintain a 10% federal tax credit.
The federal tax credit in 2019 allows you to take 30% of the cost of your solar array off of your taxes.
That means that a $35,000 solar array ends up costing $24,500.
Everyone is eligible for the solar tax credit as long as you own the solar energy system. Even if you don’t have enough tax liability to claim the entire credit in one year, you can claim the tax credit in future years until 2021.
2019 is the last year that the 30% federal tax credit is going to exist. We recommend that homeowners utilize the full tax credit to get the best value and savings from a solar array.
Utah State Solar Tax Credit
The state tax credit for 2019 is 10% up to $800.
As of February 6th, 2017, House Bill 23 (HB23) has passed committee and is waiting to be voted on by the Utah Congress. The purpose of House Bill 23 is to phase out the 10% Utah state tax credit (up to $2000) by 2021. Lawmakers are claiming that the Utah solar tax credit is costing the state $60 million per year.
Solar advocacy groups like Utah Solar Energy Association(USEA) have given up the fight against HB23 in favor of compromise. Ryan Evans, The President of USEA, stated, “We would have preferred to see the tax credits live on...Realizing the political pressures and budgetary pressures this year, however, we aren’t contesting this.”
Rather than fighting against HB23, the focus shifted towards a small piece of the bill. HB23 in its original writing had proposed a gradual decline of the state solar tax credit until it was eliminated by 2021. The bill also put a cap on the funds available each year, starting from $4 million and declining to $0.
A compromise was reached that would eliminate the cap on funds available. As it stands, HB23 will be heard by Congress 3 times before it is voted on. HB23 will reduce the state tax credit by $400 each year until 2021 when the state tax credit will be fully eliminated.
In 2019 the state solar tax in Utah will be 10% of the total price of a solar array up to $800. This tax credit is going to be reduced to $400 in 2020 and $0 in 2021.
By utilizing the current tax incentives in place this year, homeowners in Park City can dramatically reduce the price of switching to solar and improve long term savings.
2019 is the last year that the 30% federal tax credit on a solar array will exist. The federal tax credit will reduce yearly until it is eliminated in 2021. The state tax credit has also been reduced to $800 for 2019 and will be eliminated by 2021 as well.
Switching to solar in 2019 will help Park City homeowners get the most out of tax incentives that will be eliminated in the next few years.