Utah offers a variety of tax credits for solar panels installation on residential properties. We appreciate that it might be confusing to know which tax credits are still valid in 2021 and how to use them.
What are solar panel tax credits?
Utah currently has two solar panel tax credits. The Federal solar tax credit and the Utah solar tax credit. You can apply for both simultaneous when you get a new solar panel system on your roof.
How to utilize the Federal Solar Tax Credit?
Also known under the name Investment Tax Credit (ITC), this incentive targets homeowners who are completed their solar panel installation. You can apply in 2021 for a 26% tax credit with no capped amount.
How to utilize the Utah Solar Tax credit?
You might have heard of the Utah State initiative as the Renewable Energy System Tax Credit (RESTC) program. To use the 25% of the eligible system cost or $1,600 credit until 2021, you will need an account with the Governor’s Office of Energy Development along with your TC-40E.
How are tax credits changing?
Both tax credits are expected to phase out. The Federal tax credit decreases to 22% after 2022. It will expire if it is not renewed in 2024.
The RESTC tax credit decreases by $400 every year until it naturally expires after 2024, essentially extending the state solar tax credit.
What’s the principle of the tax credit?
Both tax credits incentivize solar energy, using a deduction from what homeowners would otherwise owe the Utah state taxes. In other words, if you do not owe state taxes, you can’t benefit from the tax credits in place.
Why take advantage of tax credits in 2021
As mentioned, both the Federal and Utah tax credits are designed to phase out in the coming years. There is currently no information on whether federal or local governments will consider extending or replacing tax credits in Utah.
How much are tax credits worth?
The Federal Tax Credit brings a 26% credit until the end of 2021 for all fully installed and completed solar system installations. If you are starting a solar system project in 2021, but the completion date is 2022, the credit will be 22%.
The RESTC program offers a tax credit of 25% of the eligible cost of the system or $1,600 until 2021 — whichever is less. Similarly, if the installation starts in 2021 but ends in 2022, the tax credit will be the completion year’s one.
How to claim tax credits
You can claim tax credits when filing your income taxes. You can claim the Utah’s RESTC program in addition to the ITC incentive.
Installing solar energy
To benefit from tax credits, you will need to have already financed and installed your solar system on the roof of your property. It’s worth discussing tax initiatives with your installer, as they will take care of most of the steps and the application for the TC-40E for you.
The TC-40E form with the certification stamp is issued by the Renewable Residential and Commercial Energy Systems Tax Credits. This validates your solar system and allows you to claim your credits.
In conclusion, Utah residents can benefit from two tax credit systems that are both phasing out. Make the most of your investment by completing your solar installation soon!