If you were one of the more than 1,900 Solar Champions to join our community last year, here’s a guide to the most important tax incentives available for your clean energy investment(s). Note that ReVision Energy does not provide tax advice and this is for informational use only; we strongly recommend you work with a professional tax preparer.
Residential Solar (and Solar-Powered Battery) Tax Credit
Claim the solar tax credit by using form 5695 – https://www.irs.gov/pub/irs-pdf/i5695.pdf
You can claim a 30% tax credit (now 26% for systems installed in year 2020) of the gross cost of the fully installed system, as it appears on our final invoice to you. You can claim the credit in the year in which the system was built and installed.
Batteries that are connected to a solar array and recharged by solar also qualify for this credit, per an IRS letter released in 2018 (https://www.irs.gov/pub/irs-wd/201809003.pdf)
Commercial Solar Investment Tax Credit, MACRS, Bonus Depreciation
Businesses can claim a tax credit structured similarly as the residential one, as well as MACRS and bonus depreciation, but it’s (naturally) more complex than filing as a residence. See Form 3468 (https://www.irs.gov/pub/irs-pdf/i3468.pdf) and Form 4562 (https://www.irs.gov/pub/irs-pdf/f4562.pdf)
EV Charging Tax Credit
In late 2019, US Congress extended a residential tax credit for up to 30% rebate ($1,000) on the installation of EV charging stations, applied retroactively, as well as through the end of 2020. This means that if you had us install an EV charging station last year, you may be eligible for this credit, and also, if you installed in previous years and did not apply for this credit, you may be eligible to submit an amended return and receive it now.
(Note, there is also a tax credit for buying an electric vehicle!)
Heat Pump Tax Credit
As part of the same action that extended the EV Charging equipment tax credit, Congress also extended a retroactive $300 tax credit for heat pumps, under the EnergyStar program.
This one is slightly more complex in that the credit has been available for a while and applies to multiple technologies, and has a $500 lifetime cap. So if you’ve made many energy improvements (even it for a home you no longer live in) you may have used it already… however it’s certainly worth your time to see if you qualify!
Also: this credit is good until the end of 2020! So it’s a nice booster if you’re looking at installing a heat pump this year.
Many heat pump water heaters also qualify for a $300 rebate under this program. Somewhat confusingly, the cap is $500. So say you have (1) qualifying heat pump, and (1) qualifying water heater, you do not receive $300 + $300 = $600, but instead $500.
Incentives in place for 2020!
If you weren’t able to go solar in tax year 2019, there are lots of reasons to make the move in 2020. Between the federal tax incentive, and incentives for complementary EV and heat pump technology, there are many financial reasons backing up the environmental case to transition to clean energy.