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The solar Investment Tax Credit (ITC) started in 2005 under the Energy Policy Act (P.L. 109-58) and is the most important federal policy to support the installation of solar energy projects in the United States. Through the ITC, a business can receive a 30 percent federal tax credit for installing solar on their property. Since the eight-year ITC was put into place, thousands of companies have taken advantage it to reduce their tax liability, increase property value, and show their commitment to a sustainable future. However, as the end of 2015 came near, many industry experts, including our company, felt the program would expire completely or be reduced significantly. Thankfully, on December 18th, 2015, with only a few short weeks remaining in the program, Congress stepped in to extend the ITC until 2023.
The bill extends the 30% Solar Investment Tax Credits for both residential and commercial projects until 2019, and then reduces the credit to 26% in 2020, and 22% in 2021 before dropping permanently to 10% for commercial projects and 0% for residential projects. Also, the bill includes language to allow project owners who start construction before the end of 2021 to be allowed a larger credit following the completion of their project, as long as it’s in service before the end of 2023.
The table below shows the expiration date for solar technologies based on when construction begins and the value of the investment tax credit for each technology by year.
For business owners in Florida, the extension presents an excellent opportunity to install solar on a commercial property while taking advantage of the full 30% tax incentive until 2019. “We’ve see a significant increase in demand of businesses wanting solar on their assets since the extension was announced,” said Advanced Green Technologies Vice President Clint Sockman. He further adds, “With a 5-10 year project ROI now is the time to go solar, as we may never see incentives this aggressive again.”
Overall, the extension to the ITC is expected to add 95 gigawatts of solar power in the United States over the next five years, the equivalent of powering 19 million homes, according to Solar Power World Magazine. Furthermore, by 2020, the industry is expected to employ up to 220,000 additional workers while helping to offset 100 million metric tons of CO2 emissions, equivalent to removing 20 million cars off the roads.
ITC Extension Impacts
How do you feel the extension of the ITC will affect your community? Do you have any questions about the program? We would love to hear from you. Please leave your comments below.