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Solar Incentives: A Good Reason to Use Solar Panels

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Solar Incentives: A Good Reason to Use Solar Panels
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Solar energy is clean energy and everyone knows that. Solar panels can be an excellent source of energy (Not a secret!!!). In the modern world, where everyone wants energy resources, solar panels are an ideal source of clean energy.

With so many researches currently ongoing to find a sustainable use of our energy resources, solar energy is your only option to get an unlimited source of clean energy.

To encourage US citizens to start using solar panels, the government is offering solar incentives which have shown some promising outcomes till now.


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In this post, we are going to discuss how solar incentive is a good reason to switch to solar panels in the United States. It will be an interesting read if you really want to save other energy resources from extinction.

So, without any further ado, let’s get you started

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What are Solar Incentives & How Do They Work?

Current time demands you take renewable energy resources seriously or else sooner we all will be out of energy resources. That is the major reason the American government offers solar incentives to all the individuals or businesses who decide to use solar energy.

The approach is simple; they will cut your investment so that you can easily install photovoltaic panels. It is also one of the most appreciated initiatives of the US Government.

Allow me to break it down further so that you can have a better understanding of how you can use solar incentives.

The Federal Solar Tax Credit

You can consider it as an investment tax credit which allows you to pay off your annual IRS bills by using 30% of your solar installation cost.

If you are a homeowner, then you have the opportunity to claim a maximum credit of 30% (If you’re a homeowner) on the installation of the solar panel. This credit includes the following costs:

  • Perp Works
  • Supplies
  • Roof Repairs
  • Labor costs

It gives you the liberty to save thousands of dollars in a single financial year.

You haven’t even heard about the best part yet. If it costs you around $18,000, you have the liberty to claim about $5,400 tax credit. So, if you own only $4,000 in Federal taxes, you can deduct $1,400 from your taxes next year.

But still, there is a catch!!!

With the increasing popularity of solar energy, the Federal government might pull this deal off anytime. So, you might want to grab this window of opportunity while you can (because the window will close anytime soon!!!)

How to Claim Solar Tax Credit

If you’re looking to claim Solar Tax Credit (also known as Investment Tax Credit), then it’s quite simple.

Firstly, you must assure that you get qualified for the credit.

Till the time you have solar panels, you can avail the credit. In this situation, when the time comes to pay tax, credit must be claimed through step-by-step instructions from Form 5965 to Form 1040.

Steps to Claim

  • Decide if you’re qualified for the Federal ITC. Ensure that the ownership for the credit and federal tax liability must be in order.
  • Finish the IRS Form 5965 for confirming your qualification for the renewable energy credits. In this form, figure out the line which describes ‘Qualified Solar Electric Property Costs’. Mention the amount in the box. Next, multiply such number by 30%. This form will assist you with the extra added tax credits which you qualify for.
  • When the number is tallied, enter that number in the form 1040. This form will ask you to add the information regarding renewable energy credit in it.

You are eligible for Federal ITC till you own solar energy system instead of renting your panels. In the event, you sign a rental agreement; the third-party owner will be entitled to the credit.

In some cases, the lease will offer you with financial advantages related to the sale of SRECS (Solar Renewable Energy Certificates).

The Net Metering Program

This program enables you to sell excessive solar electricity at credits, not on the cash basis. With this special incentive, you can get negative electricity bills or $0 every month. It helps to speed up the payback period of a solar PV system. This eliminates the need to buy battery storage for the solar installation.

How does it Work?

Solar panels generate a great deal of electricity in the daytime. The system sends excessive electricity to the grid by giving to the public utility company for the use. Hence, the energy meter ticks backward. At night, more electricity is consumed than solar panels produce. The system begins to pull the electricity from the grid without any interruption. In such a situation, the meter will tick forward.

If you buy the correct size solar array, then excessive electricity that gets back to the grid in the day is equivalent to the amount during high usage in the evening. Net metering will enable you to never pay an electricity bill again. It is one of the best innovations in environmental tax incentives.

When your solar system gets connected to the grid, there’s no need to do anything else. The system like New Jersey SCREC Program will switch between feeding excess energy into the grid and take the energy out when you require it. This is done without any interruption.

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Paschal Okafor is NaijaTechGuide Team Lead. The article Solar Incentives: A Good Reason to Use Solar Panels was written by Paschal Okafor. The article was last modified: September 22nd, 2018

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