Solar Investment Tax Credit

A significant portion of 2008’s EESA provided new life for the nation’s solar power industry. The solar investment tax credit section of the legislation extended the 30 percent tax credit afforded those who convert to solar power. The credit, originally established by legislation passed in 2005, now expires in 2016. The act also dropped the $2,000 credit cap placed on residential solar energy installations. As part of the legislation, utilities may now benefit from the credit, as can alternative minimum tax filers. EESA also authorized the issuance of $800 million in clean energy bonds for green energy generating facilities.

American Recovery And Reinvestment Act

The Recovery Act created additional energy credits for home and business owners. The energy efficient property credit applies to homeowners and addresses alternative energy, such as solar, and was designed, like EESA, to spur investment in alternative energy sources. The nonbusiness energy property credit, also for homeowners, allows a 30 percent federal income tax credit for installing certain high-efficiency appliances. Some of the available credits even include installation costs. Businesses who embrace renewable energy applications found ARRA a source of many tax credits, ranging from grants to credits for property financed by subsidized energy financing.

Homeowner Solar Energy Credit

Homeowners who convert water heaters or entire home systems to solar energy qualify for the 30 percent credit as extended by the 2008 act and confirmed in the 2009 legislation. ARRA dictates that the system must carry the manufacturer’s certification that it complies with the tax law. The 30 percent credit applies to the product and its installation, and there is no limit to the amount of credit a taxpayer can claim.

Business Solar Energy Credit

Businesses who place facilities in service that utilize solar or some other renewable energy source may choose the 30 percent tax credit for investments in renewable energy projects or the production tax credit, which provides a credit of up to 2.1 cents per kilowatt-hour for electricity produced. Businesses may not claim both credits.