Your Federal Solar Tax Credit

As of the beginning of 2009, the federal solar tax credit available for home owners who install renewable energy systems on their residential property has been raised. In the past, and for all systems installed prior to the beginning of 2009, the maximum federal rebate was 30% or $2000, whichever was the lesser.

Now the rebate has been upped to 30% of the total installation cost regardless of the final price, which is an immense boon to the solar industry and America's hopes of energy independence. This rebate will be in effect until 2016, so there has never been a better time to install solar power on your home!

What If I Don't Pay That Much Tax?

If you don't earn enough money for your tax to cover the rebate, it is carried forward to the next financial year. You won't miss out on your rebate.

An Example Installation

Let's have a look at how this federal tax credit and how it can help you save with solar energy.

Let us assume you install a 3kW solar system on your home and the cost of this system is $30,000. The federal tax credit slices $9,000 off this bill, reducing it to $21,000. That's not bad, since the installation is likely to add at least this much to the value of your property.

In addition to this, most states have at least some additional rebate scheme. The percentages vary between states, and some also offer property tax exemptions as well. A fair rebate amount seems to be in the vicinity of 20% to 40%. If we take the middle value, we get to slice another 30% ($9,000) of the system price, now reducing the cost to $12,000.

As the systems are good for at least 25 years, it's not easy to see how installing a solar power electricity system on your home makes a lot of sense in the current environment.

Solar Hot Water

The same rules apply for federal tax credits on solar water heating. Systems installed after the beginning of 2009 attract a 30% credit from your tax with no maximum value.

Check Your State's Rebate

The range in rebates offered for both solar electricity and hot water are vast. Some states offer nothing, while some offer as much as 60% off the cost of the installation. In this latter case, solar installations are virtually free.

More Details

If you want to have a look at the very technical and legal-speak laden Bill that removed the $2000 maximum rebate on the Federal solar tax credit, click here.

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