Renewable Energy

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Solar ITC 101: What is the Solar Investment Tax Credit?

The Solar Investment Tax Credit (ITC) is one of the most important federal policy mechanisms to support the growth of solar energy in the United States. Since the ITC was enacted in 2006, the U.S. solar industry has grown by more than 5,000% - creating hundreds of thousands of jobs and investing billions of dollars in the U.S. economy in the process. In 2015. SEIA successfully advocated for a multi-year extension of the credit, which has provided critical stability for businesses and investors. Despite the overwhelming success and popularity of the ITC, the value of the credit will unfortunately start decreasing after 2019.


Impact of the Solar ITC

The ITC has proven to be one of the most important federal policy mechanisms to incentivize clean energy in the United States. Solar deployment, at both the distributed and utility-scale levels, has grown rapidly across the country. The long-term stability of this federal policy has allowed businesses to continue driving down costs. The ITC is a clear policy success story - one that has resulted in a stronger and cleaner economy.


How does the Solar Investment Tax Credit Work?

The Investment Tax Credit (ITC) is currently a 30 percent federal tax credit claimed against the tax liability of residential (under Section 25D) and commercial and utility (under Section 48) investors in solar energy property. The Section 25D residential ITC allows the homeowner to apply the credit to his/her personal income taxes. This credit is used when homeowners purchase solar systems outright and have them installed on their home. In the case of the Section 48 credit, the business that installs, develops and/or finances the project claims the credit.


Source: www.seia.org