Tax Credits/Cash Rebates

Right now is a very exciting time to “Go Solar” in terms of tax credits and rebates available to qualified homeowners. With this in mind, it is very important to act quickly find out if you qualify and can take advantage of these wonderful programs listed below while they last!

Tax Credits:

The Energy Policy Act of 2005 (EPAct 2005), is the first effort of the United States government to address U.S. energy policy since the Energy Policy Act of 1992. Among many other things, the 1724 page law provides new tax incentives for a number of solar and energy efficiency measures. Among these incentives is a 30% tax credit (not a tax deduction), on the total purchase and installation cost of these systems. In February, 2009, Congress passed “The American Recovery and Reinvestment Act” (ARRA). This nonrefundable (you don’t have to pay it back), energy tax credit will help individual taxpayers pay for qualified residential alternative energy equipment, such as solar hot water heaters and PV systems. The new law allows for an uncapped credit equal to 30% of the total installed cost of qualified property. There is an important difference between a tax deduction and a tax credit. A tax deduction is subtracted from income before total tax liability is computed. On the other hand, a tax credit is subtracted directly from the total tax liability or provided as direct cash back if there is no tax liability. This means that a deduction and a credit have very different values, with a credit being 3 or more times more advantageous to the taxpayer than a deduction. For example, a tax credit of $1,000 for someone in the 28% tax bracket is equivalent to a tax deduction of $3,571.

Simply stated, the Federal Government is giving back to you, in cash, 30% of the total installed cost of your solar system by returning your already paid in federal income tax dollars. If the 30% number should exceed your previous year’s paid-in federal income tax, then you can carry the cash credit forward to use the following year. Let’s look at the following examples:

Federal Tax Brackets:

Your tax bracket is the rate you pay on the "last dollar" you earn; but as a percentage of your income, your tax rate is generally less than that. First, here are the tax rates and the income ranges where they apply:

Tax Year: 2010

Filing Status: Married Filing Jointly

If your taxable income is between … Your tax bracket is …

0 and $16,750 10%

$16,751 and $68,000 15%

$68,001 and $137,300 25%

$137,301 and $209,250 28%

$209,251 and $373,650 33%

$373,651 and above 35%

Tax Year: 2010

Filing Status: Married Filing Separately

If your taxable income is between … Your tax bracket is …

0 and $8,375 10%

$8,376 and $34,000 15%

$34,001 and $68,650 25%

$68,651 and $104,625 28%

$104,626 and $186,825 33%

$186,826 and above 35%

So, for example, let's assume your annual income is $72,000 and you are married filing jointly:

($16,750 minus $0) x .10 = $1,675.00

($68,000 minus $16,750) x .15 = $7,867.50

($72,000 minus $68,000) x .25 = $1,000.00

Total $10,362.50

This puts you in the 25% tax bracket, since that's the highest rate applied to any of your income; but as a percentage of the whole $72,000, your tax is about 14.392%.

Therefore, you have the ability to receive up to $10,362.50 back as a cash credit to utilize towards the purchase of a qualifying solar system limited only by the 30% ratio to total installed cost.

This credit can be deducted directly from any taxes a taxpayer may owe on a dollar for dollar basis. If no taxes are owed or a refund is due, the credit amount will be added to that number. It is basically a dollar for dollar refund of taxes paid for the full 30% of the cost of the SWH or PV system. What does this mean for you? The federal government will pay you for 30% of the cost of your system!! Don’t let this amazing opportunity pass by without benefitting from this great incentive!! Be an early adopter!

State Rebate Programs:

Many states and utility companies are also encouraging homeowners to “Go Solar” as well. The amount of rebates or credits varies by program and location. Be sure to ask us so we can work with you to get every dollar available!

Local Rebate Programs:

Just like the State rebate programs, many municipalities are encouraging their citizens to save money and energy by using the sun! We are experts in finding you every dollar available to start saving you money right away! All you need to do is ask us!!

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