Federal Investment Tax Credit (ITC)
One of the largest incentives available to California homeowners is the Federal Investment Tax Credit (ITC).
From now until 2021, the federal government is offering a 26% investment tax credit against the total cost of a home solar system. In 2021, the value of the tax credit will lower to 22%. And after 2022, the tax credit for residential solar systems will end. To reap the benefits of this major incentive, you’ll need to act fast.
How does it work?
If you purchase your solar system outright, you can apply 26% of the total cost of your system installation to your tax liability for the year.
For example, if your solar panel system costs $17,000, a 26% tax credit would be $4,420. So, if you owe $4,000 in taxes for 2020, your tax bill will be reduced to zero and you’ll receive $420 in tax credits for your return.