Solar Tax Credits

Solar Tax Credits Extended

In what promises to be a huge boost for the solar industry, the extension of the solar tax credit bundled into the recent $700 billion financial rescue package will create thousands of new clean-tech jobs while slashing the cost of solar panels for homeowners and businesses.

The recent “economic rescue bill” didn’t make the credits permanent, but it definitely sweetened the deal for consumers to go solar in two very real ways. First of all, the credits (which were set to expire this year) have been extended for eight years, and secondly the previous cap of $2,000 for a residential solar system has been lifted — meaning a whole-house system could earn you as much as $10,000 or more in tax credits.

Solar is a good investment right now. Not only can you likely recoup even more tax credits from your state or local taxes (see “Making Solar Affordable” below), but also as the price of energy increases, you’ll be immune, generating your own clean, green power for yourself. (Plus, as more and more utilities allow solar-generating customers to sell power back to the grid, you may be able to generate future income from your solar system.)

For utilities such as Pacific Gas & Electric, the tax credit will make big solar projects viable — both photovoltaic installations and large solar-thermal facilities where the sun heats a fluid that turns a turbine to make power. SunPower and PG&E recently announced plans to build a big solar power plant in central California.

The extension had been repeatedly voted down over the past several months as Congress debated how to pay for it.