Solar power is energy produced by collecting sunlight using rooftop panels wired into a system that the converts that sunlight into electricity. This sustainable source of energy can be used to power homes, businesses, or even farms.

Having solar panels installed on your roof can enable you to minimize or even eliminate your monthly energy bill while substantially reducing your carbon footprint. In many regions, there are also tax incentives available for home- and business-owners who opt to go solar.

Solar Tax Incentives: ITC and NEM

Currently there are a number of state sponsored incentives and tax credits in place for homeowners who make the switch to solar power.

The federal solar Investment Tax Credit (ITC) is a federal tax credit designed to support the deployment of solar energy across the United States. The ITC offers a 30% dollar-for-dollar reduction in income taxes for homeowners based on the amount of money that they invest in a solar energy system.

Since first being implemented in 2006, the ITC has helped annual solar installation grow by over 1,600%. The ITC is regarded as among the most important federal policy mechanisms designed to support the proliferation of solar energy across the U.S.

In 2008, the ITC was given a multi-year extension and since that time, it has continued to drive growth in the solar industry across the country.

Net energy metering, also known as NEM, is another incentive that enables homeowners who generate their own energy using solar to offset the energy they produce against their monthly bill. Through NEM, many homeowners are able to substantially reduce, or even altogether eliminate their monthly power bill.

Changes to Solar Tax Incentives

Under current law, the ITC is set to remain in effect through December 31, 2016. But after this date, the residential credit under the ITC will drop to zero. However in California and other states, there is growing opposition to ending the current tax incentives for solar power.

“For many parts of the industry, especially utility-scale solar and companies that lease solar in the residential sector, the federal tax credit has been very helpful,” said Bob Gibson, vice president of knowledge at the Solar Electric Power Association. “A lot of entities have used this credit productively, so an extension would probably help that trend continue.”

Gibson isn’t alone. Sen Charles Schumer (D-New York) also opposes the imposed cut-off date for the current ITC. Schumer, like others, feels the Solar Investment Tax Credit has been instrumental in helping to drive the growth of solar.

To Schumer and other supporters of extending the current ITC incentives, ending a program that encourages consumers to adopt an energy source like solar makes little sense at a time when many states are struggling to meet their own standards for renewable energy.

Still Time to Benefit from Current Incentives

With the current incentives still in place, there’s still time to benefit from the 30 percent ITC credit. There are also plans in the works to end the current program for net energy metering.

The good news however, is that customers who install solar and opt into net energy metering will be grandfathered into the current system for the next 20 years. So in many ways, now is as good a time as there has ever been to consider going solar and declaring your energy independence.

If you’d like to find out how installing solar panels on your roof can help you drive your electric bill down to zero, contact us today for a free quote.