Federal Solar Tax Credit

Solar energy is an answer to the world energy crisis. This energy is clean and renewable and does not create any environmental hazards. Knowing the impact of energy saving, that solar energy can have on the country, the present government of the United States announced the Economic Stimulus Package which contains the Federal Solar Tax Credit.

According to this package if you install the panels needed for tapping solar energy, and also solar water heaters you can get 30% as Federal Solar Tax Credit. This means you get a tax credit on 30% of the amount you spend on setting up the Solar panels and Solar water heaters. There is no limit on the maximum amount that you can spend on these items, but they should confirm to a given set of specifications. When you confirm to these guidelines your spendings will be qualified for the 30% tax credit.

The Solar Panels or the Photovoltaic system that you install should be able to generate electricity which can be used in your residence. The system should also comply with the fire and electrical safety codes of your area. The solar water heater that you install should have the Energy Star certification and also certified by SRCC (Solar Rating and Certification Corporation). To claim the 30% tax credit, the spending taken into account will be only the solar water heater and not any other heating system of the residence. Also the spending cannot include water heating for hot tubs and swimming pools. The water from the solar heater has to be used inside the residence only.

To qualify for Federal Solar Tax Credit, you should have installed the Photovoltaic system and/or Solar water heater after the 17th of February 2009. This scheme is available till the end of the year of 2016. It also does not matter what your income is, as there are no Caps on income to qualify for Federal Solar Tax Credit.

The Federal Solar Tax Credit is non-refundable. You will not get a refund from the IRS if your tax amount is less than the qualified Federal Solar Tax Credit.

Apart from the 30% Federal Solar Tax Credit on the spending on installation, you will also be saving every month a good amount on your energy bills. If you take into account a regular certified solar water heater, it can save you at least 50% to 80% of the heating energy bill.