While shifting to solar energy has considerable upfront costs, it’s an investment that yields several rewards in the long run. Choosing to go solar includes lower utility bills, less energy dependence from your power provider, and a smaller carbon footprint—helping you be a better steward of the planet.
If you reside in Florida and are still contemplating going solar, you should know that you are eligible for Florida solar tax credits and incentives. The government provides these to help make the switch easier and more financially sensible.
Below is a guide to assist you in comprehending how the tax credits and incentives work and how they might save you money so you can gain the benefits of going solar.
Federal Solar Tax Credit
The federal tax credit is earned as a percentage of the total cost of installing a solar photovoltaic system. Once claimed, you can use the tax credit to reduce your federal income taxes.
If you install a solar panel system by the end of 2022, you get a 26 percent tax credit for it. However, the rate decreases to 22 percent for systems installed in 2023. You will no longer get tax credits when it expires in 2024 unless Congress extends the Investment Tax Credit.
There is no limit on how much tax credit amount you can earn; however, you must meet the following requirements to be eligible:
- You must install the solar PV system at your residence in the US.
- It must be in service—installed and producing electricity—between January 1, 2006, and December 31, 2023.
- You own the system—purchased outright or financed with a loan—and not under lease or purchase power agreement.
- The system should be an original installation—it must be new or used for the first time.
Solar System Property Tax Exemption
Although the state does not offer a state tax credit, one of the Florida solar panel incentives available to homeowners is the property tax exemption. Under state law, eligible renewable energy additions or installations that add value to homes, such as a solar PV system and batteries, are excluded from the property’s taxable value.
Home Solar System Sales Tax Exemption
According to Florida statutes, all solar energy systems and components purchased and installed in the Sunshine State are exempt from sales tax. It means that you save six percent of what you might regularly pay.
In addition to tax credits and exemptions, Florida solar panel incentives also include net metering offered by different utility companies. Under the state’s regulatory policy, solar energy system owners receive credits equivalent to the retail rate for excess power sold and sent back to the electric grid as additional supply. The credits will be reflected in your energy bill and deducted from your consumption.
Some utility companies will pay the monetary equivalent of unused credits for the year at special rates.
Is the Solar Tax Credit a One-Time Credit?
Yes. The federal solar tax credit is only available once for each system installed. However, it is possible to roll over the unused amount to the following year. To clarify, suppose the tax credit surpasses your tax liabilities. In that case, because the solar tax credit is nonrefundable, you may deduct the excess in the next tax year.
How Do I Apply for Solar Tax Credit in Florida?
When filing your annual tax return, you can get the Florida solar tax credit from the federal government. If you are eligible based on the above criteria, complete IRS Form 5695 and attach it to your Form 1040 or Form 1040NR.
Refer to this detailed guide on how to fill out the form for residential energy tax credits.
How Many Years Can I Claim Solar Tax Credit?
You can only claim the Florida solar tax credit from the federal government for one year on every residential system installed. This means you cannot get tax credits for two years or more for the same solar PV system because your tax liability is lower than the estimated credits.
Let’s assume you don’t owe any taxes this year but have installed a solar energy system. You don’t have to claim the tax credit right away; instead, you can apply it to your tax liabilities from the previous year or any time in the next 20 years. However, it is best to seek guidance from a tax professional on redeeming the credit.
Save More with Solar
Have a deeper understanding of how switching to solar delivers significant savings with available Florida solar panel incentives. Learn more about solar from the expert team at Current Home.