A homeowner wanted to make the switch to solar panels and take advantage of the tax credits available but wasn't quite sure how the system worked.
"It's going to cost me around $30k and I am planning to finance it. I am most likely going to repay the entire thing later this year," they wrote in the r/solar subreddit. "My question is whether or not I will get the 30% tax credit if I do financing?"
The simple answer is yes, but there's a few things to consider.
The scoop
In 2022, Congress passed the Inflation Reduction Act, which offers homeowners tax credits and rebates on green upgrades to their homes, including installing solar panels and electric appliances and improving weatherization. You can earn up to $14,000 from those upgrades in the short term, with long-term savings on your energy bills.
The IRA offers a 30% tax credit for rooftop solar. So, for example, installation in Wyoming costs up to $45,000, but with the tax credit, residents could save up to $13,000, according to EnergySage. Dubbed "the Expedia of solar," EnergySage is a free tool that can help calculate those costs and rebates and find the best options for your home and energy usage.
There are other programs available too, including Arcadia, which focuses on solar energy, and WattBuy, which also offers personalized electrification plans, to help you find the best way to upgrade your home.
If any of that sounds appealing, you may want to act sooner rather than later, as President-elect Donald Trump has said, per The Salt Lake Tribune, he will "rescind all unspent funds" allocated for the IRA. That action would require an act of Congress, but with its future uncertain, taking advantage of the IRA's offers quickly may be in your best interest.
How it's working
Though pricey upfront, installing solar panels is one of the best ways to save money on your energy bills. Forbes estimated you can save between $25,500 and $33,000 over a typical set of panels' lifetime. They also boost your property value, adding up to $15,000 in resale value, per Lawrence Berkeley National Laboratory.
The Department of Energy provided a hypothetical example of a homeowner in California, not unlike the original poster in the Reddit forum, who installed a $15,000 system and received the 30% tax credit. "She can expect to save around $200 per month on her electricity bills and pay back the cost of the system in less than 5 years," the site explains.
🗣️ Which of these factors is the biggest obstacle preventing you from getting solar panels?
🔘 The upfront cost 💰
🔘 The way they look 🙈
🔘 Not sure where to start 🤔
🔘 No concerns here! 😄
🗳️ Click your choice to see results and speak your mind
On top of the financial savings, solar panels are great for the environment, relying on the sun's energy instead of dirty sources such as fossil fuels. The DOE also notes that solar can reduce water consumption and waste.
What people are saying
Redditors agreed that the tax credit would be applicable to the financing but highlighted some important information.
"Yes, with the caveat that the 30% tax credit is only good for actual costs of the system and installation," one person wrote, linking to the DOE website. "It is not applicable to finance charges or interest."
Another noted that the credit only applies to outright owning a system, explaining, "That tax credit is not available for homeowners who opt for a solar lease program."
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