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As we sit in the middle of winter, most individuals cant believe how higher their utility bills are. Going with solar energy can lower your bills and you get a hefty tax credit

Solar Tax Credit

Solar energy is a clean, renewable power source. The production of solar power on residential and commercial structures generates no pollutants and is starting to make severe monetary sense. In 35 states, the idea of net metering is now an established truth. Net metering merely signifies you can sell energy from solar panel systems back to utilities, therefore eliminating or seriously lowering utility bills. As oil and natural gas charges skyrocket, the Federal Government is undertaking even more to promote the use of solar power.

In 2005, Congress enacted the Energy Policy Act. As portion of the act, a tax credit was established for any particular person purchasing and putting in residential solar energy systems for electric and water heating purposes. If you buy and set up solar systems for either of these purposes, you can take a 30 percent tax credit. If you set up systems for both of these purposes you can double the tax credit. To avoid tax abuse, every single tax credit has a cap of $2,000.

Importantly, tax credits are far far more useful than tax deductions. Tax deductions are taken from your gross revenue prior to figuring the amount of tax owed. Tax credits are a dollar for dollar reduction of the actual quantity of tax you owe. For instance, if you prepare your tax returns and uncover you owe $five,000 to the IRS, a tax credit would be deducted from this $5,000 figure. In short, a tax credit gives you a lot a lot more bang for your buck.

To claim the solar tax credit, there are a couple of restrictions and requirements. Very first, you cant claim the tax credit if you use the solar program to heat a hot tub or pool. Second, the system need to be licensed by a solar rating certification corporation to establish that you, in fact, installed a operating method. Third, the technique ought to be activated amongst January 1, 2005 and the end of 2007. Ultimately, you can not claim the credit if the government gave you a grant or financing to obtain the technique, to wit, no double dipping.

When solar power is discussed as a potential option energy source, most supporters point to the environmental benefits. In the end, the positive aspects to ones bank account will actually make the difference and the solar tax credit is a solid step in that path. ppi reclaim uk