THE FEDERAL INVESTMENT TAX CREDIT (ITC)
One of these major incentives is the federal Investment Tax Credit (ITC) valued at 30% of the installation cost of your solar power system. This includes the cost of the panels and components, labor, and some energy storage devices (batteries). Since its inception almost a decade ago, the federal solar tax credit has grown the number of solar installations by 1,600% in the U.S. and has been the primary driving force behind the solar industry’s recent momentum.
The great thing about the ITC is that you can pair it with other qualifying rebates to maximize your savings and greatly improve your return on investment (ROI). And it’s a tax credit, not a tax deduction this is important because it is a dollar for dollar reduction in your tax bill whereas a tax deduction only reduces your taxable income. As a business or homeowner, you will qualify for a federal tax credit equal to 30% of the net cost of your solar panel system. For example, if the cost of your solar panel system is $15,000 after cash rebates, you will be able to deduct $5,000 from the amount you owe to the IRS (Federal taxes).
ELIGIBILITY REQUIREMENTS FOR THE SOLAR TAX CREDIT
•You must own the system outright (You cannot claim if you are leasing or using a PPA)
•The panels must be new and unused (no refurbished panels or second-hand solar please)
•You cannot apply the solar tax credit for solar powered pool heaters
•You have up to 5 years after installation to either partially or fully utilize the ITC
•The system must be installed in the United States and owned by a U.S. Taxpayer
Texas Tax Code Incentives for Renewable Energy
Solar and Wind-Powered Energy Devices Property Tax Exemption
Texas offers this property tax exemption that allows residents to take an exemption from taxation (using form 50-123) of the amount of the appraised value of the property that arises from the installation or construction of a solar or wind-powered energy device that is primarily for the production and distribution of thermal, mechanical, or electrical energy for on-site use, or devices used to store that energy. "Solar" is broadly defined to include a range of biomass technologies.
Example:If your property is valued and taxed at $150,000 and you add a $15,000 system that increases the property value, the exemption applies to the added value, so with the exemption you will only be taxed on the property value before you added the system.
Incentive Type:Property tax exemption - commercial, industrial & residential.
Eligible Renewable Technologies:Passive solar space heat, solar water heat, solar space heat, solar thermal electric, solar thermal process heat, photovoltaics, wind, biomass, storage technologies, solar pool heating, anaerobic digestion.
Exemption Handbook: The Texas Comptroller's Office provides Solar and Wind-Powered Device Exemption Guidelines that outlines a list of the eligible solar and wind-powered devices, valuation methods and application requirements.