2020 Massachusetts & Federal Tax Credits & Solar IncentivesSeptember 10, 2020
When you decide to install solar energy onto your home, you’re not only helping to keep our environment clean efficiently, you’re saving a significant amount of money as well. Not only will you save tens of thousands of dollars for years to come, but credits and solar tax incentives have also been put in place to help cover the upfront cost of solar power. These initiatives make solar energy one of the most significant (and exciting) investments you can make for yourself, your family, and your community’s future, both environmentally and financially.
Both the federal and Massachusetts government have recognized the importance of solar power. They each have designed a hefty amount of solar power incentives to get solar panels onto more roofs around the state and the country. The goal of these incentives was to help encourage future solar growth and development.
However, it’s essential to act quickly once you’ve decided to research, purchase, and install solar panels onto your home, as federal tax incentive percentages are declining every year. There’s literally no better time in the future to invest in solar power than right now.
What is the federal Solar Investment Tax Credit (ITC)?
In 2006, the federal government introduced and put the solar Investment Tax Credit (ITC) into motion with the hope of encouraging the growth and development of solar power nationwide. Since then, the ITC has helped the solar industry grow by more than 10,000 percent, seeing a 52 percent annual growth each year. With its success, this solar power tax credit was extended through 2022, creating thousands of jobs and stimulating the United States economy via clean, sustainable energy.
Energy.gov defines tax credits as a “dollar for dollar reduction in the amount of income tax that you otherwise would owe the federal government.” According to SEIA.org, “residential ITC allows the homeowner to apply the credit to his/her personal income taxes. This federal solar tax credit is used when the homeowners purchase solar systems and have them installed on their homes.” The credit can only be applied to primary or secondary residences, as well as off-site community solar projects.
In the commercial sector, the business that installs, advances, and/or finances the solar energy system is qualified for the credit. The percentage credit applied depends on when construction begins on the solar project. For example, if construction starts this year (2020), and stretches into the next, the credit would stay locked at 26 percent rather than dropping to 2021’s 22 percent.
Currently, the Solar ITC credit sits at 26 percent for commercial and residential properties through the rest of 2020. However, this percentage will drop to 22 percent next year in 2021. In 2022, this percentage will fall again to 10 percent permanently for commercial properties and zero percent, expiring for residential projects. To ensure that you receive the highest rate possible at tax time, you’ll want to get started with your residential or commercial solar project as soon as possible.
Massachusetts Solar Power State Incentives, Tax Credits, and Programs
With 2,852MW of solar power installed throughout the state (ranking 8th in the nation), Massachusetts has become known for some of the best solar programs and solar initiatives available. In fact, 15 percent of the state’s electricity currently comes from solar energy, which is enough to power almost 500,000 homes.
Solar Massachusetts Renewable Target (SMART)
The Solar Massachusetts Renewable Target (or SMART) program remains one of the most incentivizing and exciting solar programs put forth throughout the nation. In conjunction with Eversource, National Grid, and Unitil, the state of Massachusetts pays customers a fixed rate per kilowatt-hour over 10-years, depending on the size of the solar system, output, and location.
In April of this year, the program was expanded to help stabilize the solar industry during COVID-19 and to assist the state in reaching its “renewable portfolio standard (RPS) goals while continuing the fight against climate change.”
Net metering is a similar yet separate incentive than the SMART program, although it is equally exciting. According to SEIA.org, net metering “allows residential and commercial customers who generate their own electricity from power to sell the electricity they aren’t using back into the grid,” via monthly electricity bill credits.
Residential Renewable Energy Income Tax Credit
The MA Residential Renewable Energy Income Tax Credit offer is perhaps one of the most straightforward solar incentives from the state. This tax credit allows solar panel owners to receive a 15 percent personal tax credit against MA state income taxes, up to a $1000 maximum incentive.
Massachusetts Storage Incentives
Massachusetts is setting itself up to be a national leader in the energy storage market with the Energy Storage Initiative, seeking to achieve a target 1,000MWh by the end of 2025. The ConnectedSolutions Program from National Grid and Eversource is an opportunity for solar panel and storage owners to receive annual rebates provided they grant their utility company access to stored energy within the battery.
Massachusetts Solar Loan Program
In 2008, as a collaboration between the Massachusetts Department of Energy Resources (DOER) and the Massachusetts Clean Energy Center (MassCEC), the Mass Solar Loan program was launched. This incentive allows homeowners to apply for a state-approved financing program enabling them to install solar systems into their homes through fixed, low-interest payments.
Install Solar Panels Today to Save Tomorrow
The world of energy conservation and politics moves quickly and sometimes changes without warning, as we’ve seen with the effects of the current global health crisis. As mentioned previously, the federal ITC incentive program is fast dropping its incentive percentage, dropping from 26 to 22 percent in under four months, and then expires for homeowners in 2022.
As the popularity of solar panels progresses, you’ll want to make sure that you get in early, get your perfect system installed, and reap the benefits as soon as possible. If you have any questions about the above incentives or if you’re ready to leap into solar power, please contact us today. As one of the region’s top solar installers, we’ll make sure that your home is energy efficient, saving you time, stress, and money.