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diy solar

Future of the US solar tax credit

mondurr

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Joined
Jul 13, 2024
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149
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With the announcement that the Trump admin will be ending the EV tax credit, should we assume the solar tax credit is also on the chopping block? I was slowly putting a system together, but with the possibility of tariffs on the way and the possible end of the solar tax credit, I just went ahead and ordered a 12000XP. I'm not ready to work on PV panels yet, but seems like I better figure that out by the end of the year as well.
 
Better get busy. Technically, you can only take the solar tax credit for the year the system is commissioned. If you don't get it powered up by the end of 2024 you can't take the credit on your 2024 taxes.
Technically, no one is going to know your system is not 100% functional. For tax purposes, any grey area should work in your favor not the government who is $34 trillion in the red.
 
Technically, no one is going to know your system is not 100% functional. For tax purposes, any grey area should work in your favor not the government who is $34 trillion in the red.
I would not bet that advice on my tax return.

The solar tax credit is a law passed by congress and the executive branch can’t take that away.

I doubt this credit will go away until it expires in 2032.
 
Technically, no one is going to know your system is not 100% functional. For tax purposes, any grey area should work in your favor not the government who is $34 trillion in the red.
No one said it needed to be 100% functional. My system is constantly evolving and the way it works now is different from the day it was first turned on, but I can prove when the inverter was powered up, when it powered its first loads, and when the solar panels/chargers were brought on line.

You can do whatever you feel comfortable with, but it would be wise to have some way to prove when your system was powered up. I have too much to lose to do otherwise.
 
My guess is that they really want to pass a permanent extension of Trump's 2017 Tax Cut and Jobs Act. In order to pay for it, repealing the Inflation Reduction Act is one way to do that. However, they will likely pass "transition" rules, such as:
Eliminate the solar tax credit for tax years 2026 and beyond. If they do make it effective in 2025, then it would be like what they did for EV's and say you had to be under contract by XXX Date and installed by 12/31/25.

Given the duck curve in CA, I'm guessing eliminating the Solar credit is low hanging fruit. But, there may be reasons to keep the Energy Storage credit.
 
While we're on the topic, I didn't realize that my system was big enough for the tax credit, however after reading the tax code, I now know it does. Since it is DIY, how would I prove when it went into service? It will be stand alone, only powering a window AC unit and our cell booster. No permits, no inspection.
 
Hopefully the solar tax credits go away, at least for imported equipment.

It makes no sense for US tax payers to subsidize jobs in the far east.
So because most of the components are made overseas, I shouldn't be able to reduce my tax bill???
 
In my not so humble opinion all tax credits should go away. Let the products stand or fall on their own merits.
I didnt get any credits on my electric car or solar system.
Tesla has made a killing on tax credits and carbon credits. It’s a joke!
For the most part it’s a tax break for the well off,
The US is up to their eyeballs in debt as well many of its citizens. I guess living within your means is considered foolish!
 
In my not so humble opinion all tax credits should go away. Let the products stand or fall on their own merits.
I didnt get any credits on my electric car or solar system.
Tesla has made a killing on tax credits and carbon credits. It’s a joke!
For the most part it’s a tax break for the well off,
The US is up to their eyeballs in debt as well many of its citizens. I guess living within your means is considered foolish!
Deductions and credits are a useful way for a government to incentivize actions, and IMO it's a much much much better tool than writing laws requiring people do something. Use a carrot instead of a stick.
 

Hopefully the solar tax credits go away, at least for imported equipment.
I agree the tax credit should go away, but for all equipment.

In order to pay for it, repealing the Inflation Reduction Act is one way to do that.
I would like that law repealed, but the federal government does not repeal any major laws, at least not often. Prohibition was repealed 91 years ago so its possible.
 
Current federal law (unless repealed) permit federal tax credits up to the the year 2032


What is the federal solar tax credit?
The federal residential solar energy credit is a tax credit that can be claimed on federal income taxes for a percentage of the cost of a solar PV system paid for by the taxpayer. (Other types of renewable energy are also eligible for similar credits but are beyond the scope of this guidance.)

The installation of the system must be complete during the tax year.

Solar PV systems installed in 2020 and 2021 are eligible for a 26% tax credit. In August 2022, Congress passed an extension of the ITC, raising it to 30% for the installation of which was between 2022-2032. (Systems installed on or before December 31, 2019 were also eligible for a 30% tax credit.) It will decrease to 26% for systems installed in 2033 and to 22% for systems installed in 2034. The tax credit expires starting in 2035 unless Congress renews it.

There is no maximum amount that can be claimed.
 
I don't want my tax dollars subsidizing anything, at all, ever. Provide the services that are absolutely necessary and that's it.
I agree 1000%.

We wouldn’t have to listen to the cry baby Elon had our government not bailed him out time and time again with tax payer subsidies.
 
If memory serves, all the automakers needed those loans to stay afloat, and tesla was the first to pay them back.
Tesla is still getting Gov handouts to this day not sure what one you’re thinking of.

The automakers who were bailed out during GFC paid their loans back with interest.
 
I activated my system 7 yrs ago and have continued to expand - claiming the credit every year and no audits. It's seemingly straight-forward (no qualification questions from TurboTax for example) and you enter just one number - total expenses for the year. I've kept detailed records of every item purchased and how it applies to my DIY system just in case. :)

There's a practical limit as it's reduces you're federal taxes and you can't go lower than $0 tax owed. So if you are entitled to a $5K tax credit but only owe $3K in taxes you're taxes for that year go to $0 and the $2K is carried forward to the next year. You don't get a 'refund check' for the extra $2K. There may also be a max credit per year but I'm not up on the details.
 
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I’d keep receipts. In paper. And snap a few pics and email them to yourself of the system operating. Those things are evidence that is was put in operation by year end. A witness wouldn’t be a bad idea. “Look, the solar charges the battery using the MPPT. Then I can light this bulb.” That’s in service in my book.

The irs may disagree but I don’t see how.
 
I’d keep receipts. In paper. And snap a few pics and email them to yourself of the system operating. Those things are evidence that is was put in operation by year end. A witness wouldn’t be a bad idea. “Look, the solar charges the battery using the MPPT. Then I can light this bulb.” That’s in service in my book.

The irs may disagree but I don’t see how.
I haven't been audited or asked to prove anything over the last 7 years. So I use common sense - like reasonable / good faith office expenses when you do you're own business - and keep records. If they disagree at some point - the records should show a good faith effort and maybe I'll wind up owing some taxes but I'm not loosing any sleep. :)

If anyone has been audited on this I'd live to hear the details....
 
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