Happy Earth Day! While we should strive to make “every day Earth Day”, it seems as though there is heightened awareness of environmental concerns on Earth Day. So I thought it would be worth mentioning the solar panel installation tax credit.
There has been solar installation tax credit for quite some time now, but it used to be 10% — with a cap at $2,000. For many folks, that meant that the cost of installing solar panels made it too great. The tax break didn’t help much. But since the recent passage of the economic stimulus bill, that tax credit has been modified. Now it is a 30% tax credit with no cap. So if it costs you $30,000 to install solar panels, you get a $10,000 credit. Not only that, but many states also offer tax credits. Check to see if your state offers these tax credits for solar panel installation. (There are also tax credits for wind power.)
If you have enough equity in your home, and can get approved, you can use a home improvement loan to help pay for solar panel installation. The interest you pay on many of these home equity loans is tax deductible, so that helps offset some of the cost as well. If you are curious about figuring out how much solar panels will cost, with a breakdown of savings, My Solar Estimator is a good tool. It incorporates tax credits, loan payments, savings and your expected energy needs.
According to the calculator, it would take 20 years for me to start into the positive — even with incentives. Since we plan on moving one more time when my husband finishes school, we probably won’t put in a solar panel system anytime soon. In three to five years, the cost-efficiency might have improved. We will, however, continue to take active steps to reduce our carbon footprint and make other energy efficiency changes to our home (which is already an Energy Star home).
Are you making changes to increase how green your home is?