Renewable energy is a hot topic these days, and for good reason. In 2015, four out of every five new power plants in the United States came from renewable sources. Furthermore, that number is predicted to rise dramatically over the next two decades. The vast majority of renewable energy comes from solar power and wind. Both of these technologies have been rapidly developing ever since they became commercially available.
Solar panels, for instance, which currently provide less than one percent of the United States’ power needs, are expected to rise up to 10 percent by 2020.  And by 2050? The expectation is that solar energy will provide 20 percent of the world’s total energy needs.
This is great news for the environment and for homeowners. Installing solar panels can reduce your reliance on fossil fuels, which in turn decreases your carbon footprint. It also reduces your energy bills, as you’ll be using free renewable energy from the sun to power your home.
Solar panel installation is not necessarily expensive, and it’s becoming more affordable every day. There are even government incentives to help make it more affordable.
As a consumer interested in solar panels, you might be wondering what those incentives are and whether or not they apply to your home. Today we’ll review some of the most popular solar panel rebates and tax credits available in the United States.
Solar Investment Tax Credit
First, let’s take a look at the federal Solar Investment Tax Credit (ITC). This tax credit applies to all solar energy systems, whether they’re installed on residential or commercial properties. The ITC allows you to deduct 30 percent of the cost of your solar system from your federal taxes. So, if your solar energy system costs $20,000, you can reduce your taxes by $6,000. And for those who claim the standard deduction on their income taxes? They can deduct the full cost of their solar panels.
The ITC is scheduled to remain in effect until December 31, 2021. After that date, it will drop down to 26 percent. You can learn more about this credit here .
There are also a number of solar panel rebates available from state and city governments. In some states, you can even get cash back for purchasing an electric car! Let’s take a look at a few examples.
Depending on your state, you might be eligible for a rebate or another form of financial assistance when you install solar panels. The California Solar Initiative, for instance, offers a rebate of $0.50 per watt for residential systems and $0.25 per watt for commercial systems. That means if your solar energy system is 5 kilowatts (5,000 watts), you’d receive a rebate of $2,500.
Similarly, the Massachusetts Clean Energy Center’s Solar Massachusetts Renewable Target (SMART) program offers a rebate of up to $1.00 per watt for residential systems and 80 cents per watt for commercial systems. So again, if your system is 5 kilowatts, you can get back 20 percent of its cost—or $1,000.
You can find a complete list of solar panel rebates by state here
Finally, let’s take a look at tax deductions. Like the ITC, these don’t reduce your taxable income each year. Instead, you subtract them from your total tax bill. To qualify for a deduction, you must own and use any renewable energy system at your property as its main source of power.
With that in mind, you might be able to deduct half of the cost of your solar panels under Section 25D of the Internal Revenue Code. So again, if you installed a 5 kilowatt solar energy system at your home, you could reduce your taxable income by $2,500.
These are just a few of the ways that homeowners can reduce their reliance on fossil fuels and save money on energy costs. And with solar panel rebates, discounts, and tax credits available at the national, state, city, and even local level , there’s no reason not to go green!