The main benefits of installing home appliances powered by renewable energy are clear — better home efficiency, lower energy costs, and sustainability. Whether it's for the sake of the environment, or to cut down your monthly utility bill, there is another HUGE reason to upgrade to renewable energy appliances — a 26% federal tax credit on your entire purchase.
Under the Emergency Stabilization and American Recovery and Reinvestment Acts, homeowners can receive a 26% federal tax credit on the purchase and installation of home improvement products using renewable energy.
Also known as the solar tax credit or renewable energy tax credit, the Emergency Stabilization Act and the American Recovery and Reinvestment Act (ARRA) were signed into law in 2008 and 2009, respectfully, to allow encourage homeowners to make their properties more energy-efficient and recoup some of the costs.
The combined effect of the these laws provides up to a 30% tax credit on both the purchase and installation of qualifying products in renewable technologies such as solar electric property, residential solar water heating, qualified small wind energy and qualified geothermal heat pump energy, among others.
The 30% tax credit incentive was lowered to 26% at the start 2020, and the legislation was extended through 2023.
How it works
Claiming the 26% solar tax credit is as easy as 1-2-3:
Save your invoice/receipt for the total cost of the products and installation.
Fill out IRS form 5695 and file it with your taxes.
That's it! 26% of your entire installation costs will be deducted from your income taxes.
Things to keep in mind:
IRS Notice 2009-41 suggests the taxpayer is not required to attach a certification statement to their tax return. However, the taxpayer should keep all documentation as part of their tax records. And, as in all tax matters, the taxpayer is advised to consult their tax professional. All manufacturers assume no liability regarding the ability to obtain federal tax credits.
How much it saves
Renewable energy products can be more expensive than their counterparts, especially when you add the cost of labor to have them installed. But the fixed rate of the tax credit is meant to make the cost much more comparable.
Take a VELUX Sun Tunnel with a solar nightlight installation from CHCD, for example. The most-popular installation, a 14" rigid Sun Tunnel ($899) with a solar night light ($30) has a starting price of $929 installed. When the 26% solar tax credit is applied the cost of the same installation is cut to $688 — more than $200 off the the initial cost!
With hundreds in savings available it's easy to see why many homeowners are upgrading their homes with renewable energy products. Make sure your renewable products are eligible for the solar tax credit before you have them installed by asking your dealer or installer — if it's powered by solar, wind, or geothermal energy, chances are the tax credit is up for grabs!
Colorado Home Cooling & Daylighting offers a variety of solar tax-eligible home upgrades including VELUX Sun Tunnels with the solar night light, VELUX Solar Powered "Fresh Air" Skylights, Solar Attic Fans and Vents, and more! Contact us today to increase your home efficiency — maximum savings, unlimited cash back, unmatched customer service since 2003!