Last December Congress extended through 2018 the 30 percent investment tax credit on solar energy installations. Starting in 2019, the credit will taper off in yearly increments of 10 percent through 2022, after which it will presumably expire. The credit, which applies to both residential and commercial property, is a dollar-for-dollar write down on federal tax owed in the year the array is purchased.
- Projects that break ground by 2019 – or which are placed in service after December 31, 2016, and before January 1, 2020 – will receive the current 30 percent tax credit.
- Projects that start construction in 2020 –or are placed in service after December 31, 2019, and before January 1, 2021 –will receive a 26 percent tax credit.
- Projects that begin in 2021 – or are placed in service after December 31, 2020, and before January 1, 2022 – will receive a 22 percent tax credit.
- As of 2022, the ITC will be reduced to 10 percent for non-residential and third-party owned residential systems, and to 0 percent for host-owned residential generation.
The extension will add an extra 20 gigawatts (GW) of solar power—more than every panel ever installed in the U.S. prior to 2015, according to Bloomberg New Energy Finance (BNEF). The wind credit will contribute another 19 GW over five years. Combined, the extensions will spur more than $73 billion of investment and supply enough electricity to power 8 million U.S. homes, according to BNEF.