Yes, you can combine federal and state solar rebates. Here’s how it works:
Combining Federal and State Solar Rebates
- Federal Solar Tax Credit: The federal government offers a tax credit known as the Residential Clean Energy Credit, which allows homeowners to deduct 30% of their solar installation costs from federal income taxes until 2032. This credit is non-refundable and can be carried forward for up to five years if it exceeds your tax liability for the year.
- State Solar Incentives: Many states, including California, offer additional incentives such as rebates or state-specific tax credits for solar installations. These state programs can vary widely but generally aim to further reduce the upfront cost of solar systems.
- Combining Incentives: While the federal tax credit does not interfere with state incentives, the value of any state rebates or incentives that qualify as purchase-price adjustments may need to be subtracted from the total cost before calculating the federal tax credit. However, state tax credits do not affect the federal tax credit’s value and can be claimed separately.
Steps to Combine Rebates
- Eligibility: Ensure you qualify for both federal and state incentives. For the federal credit, you must own the solar system and have it installed in a U.S. residence.
- Calculate Federal Credit: Determine your federal tax credit by calculating 30% of your qualified solar installation costs. Subtract any state rebates that qualify as purchase-price adjustments from these costs before calculating the federal credit.
- Claim State Incentives: Apply for any state-specific rebates or tax credits separately. These can reduce your state income tax liability or provide a direct rebate.
- Consult Experts: It’s advisable to consult with a tax professional or solar installation expert to ensure you’re taking full advantage of all available incentives correctly.
By combining these incentives, you can significantly reduce the initial cost of solar installations and maximize your savings on energy bills.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/can-i-combine-federal-and-state-solar-rebates/
