National and State Tax Credits
Federal Investment Tax Credit (FITC)
This national tax credit allows solar panel owners to deduct 30% of the cost of solar from their federal tax burden after the solar system is installed. Essentially, the ITC represents a 30% nationwide discount on solar. Due to an extension in the Build Back Better bill, the 30% tax credit will remain available for all systems installed before the end of 2032.
State Solar Tax Credits
Like the federal tax incentive, state-level tax credits allow solar panel owners to deduct a percentage of the total cost of solar from their state tax burden. These tax credits vary widely by state; in Massachusetts, for example, the state-level tax credit is 15% with a maximum credit of $1000.
SRECs and Feed-In Tariffs
Feed-In Tariff (FIT)
In states with FIT programs, utility companies purchase clean energy from solar panel owners at higher-than-retail rates. In general, the income from FIT is higher for consumers than the energy savings of consuming the power themselves. Keep in mind, like many incentives most FITs decline in value over time as more users sign up, so getting grandfathered in to an early higher rate is rewarding.
Solar Renewable Energy Credits (SREC)
In states with SREC programs, one credit is awarded for every 1000 kilowatt-hours of energy produced by solar panels. These are collected and then sold to the utility company for a profit. The price for SRECs vary by state, but per-year profits can amount to thousands of dollars. Massachusetts, New Hampshire, New Jersey, Illinois, Delaware, Maryland, Ohio, and Pennsylvania have active SREC markets.
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You install a 10 kW solar power system
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Your system generates 10 SRECs a year
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You can sell each SREC you produced for $30
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Making you $300 a year. (10 SRECs x $30)
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Plus all the savings on your energy bill
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Solar puts money straight in your pocket!
