Solar Energy Tax CreditIf you are located in the United States, you could qualify for a whopping 30% solar energy tax credit for installing solar panels and solar water heaters. Solar energy which is a renewable source of energy can also significantly reduce your electricity and energy bills and thus contribute to an additional savings. Apart from this, since solar energy is environment friendly, you will also be helping our planet to stay green and healthy. This Solar Energy Tax Credit is part of the Economic Stimulus Package passed by the Obama Government in 2009. Read this entire article to find out how you can benefit from these Federal Government Incentives for Solar Energy.
How much money can you save by using Solar energy?Even without the tax credits offered by the Government for Solar energy, installing a Solar Water Heater or Solar Panels can actually translate into monthly savings on your energy bills. Below there is a discussion on economics of solar water heater. If you would like to install solar panels please read the wikipedia article on Photovoltaic module or leave a comment and I will try to answer.
Solar Water Heater EconomicsA typical Solar water heater costs around $2000 to $4000. On an average this heater will use solar energy and help you save around 50% to 80% of your water heating bills. An average American family spends around $1400 on energy bills per year. Around 30% of this is typically for water heating. Which means around $420. Thus by installing a solar water heater you can save anywhere between $200 to $350 per year. And the best part is that recent Government renewable energy incentives provide a solar energy tax credit of 30% of that above cost. Which means a solar water heater which would have cost you around $2000 to $4000 will only cost you $1400 to $2800. Thus we are looking at over an annual savings of $200 to $350 for a one time cost of installing a solar energy unit for heating water. In my opinion this makes perfect economic sense. Moreover this calculation does not include the fact that cost of energy keeps on rising while the annual maintenance cost of a Solar Water Heater will remain more or less constant and negligible.
Solar Energy Tax Credit DetailsHere are the main highlights of the Government Incentives for using Solar Energy.
- Amount of Solar Tax Credit: You will be eligible for a tax credit of 30% of the amount you spend on installing a Solar water heater or Solar Panels (Photovoltaic Systems) provided it meets the guidelines given below. There is no maximum amount or cap for this tax credit. You get a tax credit of 30% of any qualified spending on solar energy units.
- Solar Water Heater Requirements: Not any system you install will be eligible for this tax credit. Your Solar water heater must meet the following minimum guidelines in order to qualify for the incentives. All ENERGY STAR solar water heaters qualify for the tax credit.
At least half of the energy generated by the “qualifying property” must come from the sun. Homeowners may only claim spending on the solar water heating system property, not the entire water heating system of the household.
The credit is not available for expenses for swimming pools or hot tubs.
The water must be used in the dwelling.
The system must be certified by the Solar Rating and Certification Corporation (SRCC).
- Photovoltaic System (or Solar Panels) requirements: This must meet the following basic requirements:
Photovoltaic systems must provide electricity for the residence, and must meet applicable fire and electrical code requirement.
- Dates of Purchase or Installment: Your Solar water heater or Photo voltaic System or Solar Panels must be installed or placed in service after February 17 2009 and before December 31 2016.
- Income Caps or Limits : There are no income Caps to qualify for the solar energy tax credit. No matter what your income, you are eligible for this tax credit of 30% of all qualified spending on solar units.
- Non-Refundable Tax Credit: This is a non refundable tax credit. Which means you will not get a tax refund if the amount of taxes you owe to the IRS are less than your Solar energy tax credit.
Other Tax Breaks, Tax Credits, Tax Rebates in 2009 Economic Stimulus Package that maybe of interest to you