26% Investment Tax Credit (ITC) for Solar Power
The Investment Tax Credit (ITC), or better known simply as the federal solar tax credit, was originally established in 2005 but was so popular and successful that Congress has extended the expiration date multiple times. It now offers a tax credit to homeowners and businesses who install solar energy systems through 2021.
For 2020, both residential and commercial solar energy system owners can deduct 26% of the cost of the system from their taxes, and in 2021 the percentage will drop to 22%.
After the Solar Energy Tax Credit Ends
Currently, there will be no solar energy tax credit for homeowners in 2022 or beyond, although owners of new commercial solar energy systems will be able to deduct 10% of the cost of their system from their taxes. So, if you plan to take advantage of this tax credit, you should install your solar energy system sooner rather than later. There is no cap on this percentage-based incentive.
Conveniently, even if you don’t have enough income tax liability in the year of your installation to claim the entire credit, you may roll over the remaining tax credits into future years. However, only as long as the tax credit is in effect.
You must own your system to be eligible, not lease it from a third party. The average savings from taking advantage of this tax credit is around $9,000.
Oregon Net Metering
Oregon net metering can be hugely beneficial if you install a solar energy system in terms of saving you money, and even possibly earning you money. When you install your solar system, your utility provider will exchange (at no charge) your standard meter for a bidirectional net meter.
The net meter measures both the amount of energy that you receive from your provider as well as how much energy you supply to the grid if your solar energy system generates more power than you consume.
How It Works
When you generate exactly the amount of energy that you use in a month, your net meter would read 0 kWh, and you would only be charged the monthly utility service charge, which is generally around $10-12.
If your system generates more power than you use in a month, your net meter would read a negative number of kWh, and the correlating dollar amount would be credited to your account for future use. If you produce some energy but not enough to cover your monthly energy consumption, the amount that you generated would still be subtracted from your monthly bill.
In this way, you can accumulate credit during the sunny summer months and then apply that credit to your bills in the winter, when your solar energy production will be lower and your energy demands higher. Essentially, you are “selling” your excess power back to the grid so that you can take maximum advantage of your solar energy system.
