Electric bills are soaring. Frequent power outages are hitting many parts of the county. More and more reports are coming out about how vulnerable our current electric grid is. It’s no wonder so many people are looking for other ways to power their homes and lives. And the most common option people are looking into is solar electricity. Learn which state and federal incentives may be available in your area by getting a free home solar assessment today!
Get a free home solar assessment today!
Solar Installation Costs & Incentives FAQs
While costs vary widely, currently the average cost of installing solar panels on a home in the U.S. is around $15,000. The range is typically from around $5,000 on the low end to $40,000 or more for a high-end system. These averages are for the solar panels themselves, labor costs for installation and other required equipment such as inverters and control circuitry. This does not include extras like a battery backup.
Whether it’s $5K or $40K, installing solar on your home is not cheap. So is it worth it? With the costs of solar going down and electric bills going up the answer for many is yes. Solar is totally worth it.
On average, homeowners will break even on their up-front costs after 7 to 8 years after installing solar due to their electric bill savings.
That doesn’t even factor in the increase in your home’s value with solar panels on the roof. There are multiple studies that show solar will improve your property value so you’ll get a higher price when it’s time to sell.
One caveat with that though. If you lease your solar panels, that could cause some issues when it comes time to sell your home. Some potential buyers may not want to take over the lease. And some lenders may make it more difficult for people to get a loan for a home that has leased solar panels.
So if you think you’ll move in the next few years, it may make more sense for you to buy your solar panels instead of leasing them.
Let’s start out by talking about how much the solar tax credit is and how much you can save with it. The Inflation Reduction Act of 2022 has a great tax credit for those looking to get solar panels. The previous tax credit was 26% and was set to go away completely in 2024.
However, the Inflation Reduction Act raises the tax credit amount from 26% to 30% and extends it for about a decade.
With a 30% tax credit, that means that on an installation that costs $10,000 you can get a tax credit of $3,000.
And, if you installed solar panels on your home in 2022 before the bill officially was signed into law, there’s no need to worry. The 30% tax credit will retroactively apply to anyone who installed solar panels in 2022.
To claim the tax credit, you’ll need to submit IRS Form 5695 with your taxes. Also, be sure to save all the receipts you get from your solar installation.
First important thing to know is that the credit is only available for those who buy/own their panels. If you lease your solar, you are not eligible for the credit.
You are eligible for the credit for the year that your solar project begins construction. Also, if you buy a new home that has a solar panel system on it, you are eligible for the credit the year you move into the home.
The credit is a dollar-for-dollar reduction on your income taxes. So what you’ll do is deduct 30% of the cost of your solar installation from your federal taxes.
If you’ve already paid your taxes through paycheck withholdings, then your tax credit will be applied to your tax refund. And if you don’t owe enough in taxes to get the entire credit, you can roll over the remaining credit amount to future years (so long as the credit is still in effect).
Lastly, the 30% credit applies to the cost of the panels AND equipment (ie. inverters, wiring, labor costs, sales taxes, and even battery backup systems).
