This year may be the ideal time to go solar. The Investment Tax Credit (ITC) otherwise known as the Residential Renewable Energy Tax Credit is a federal tax break that allows you to deduct 26% of the cost of buying and installing a solar energy system from your federal taxes. Unless a financial stimulus policy says otherwise, the credit reduces to 22% in 2021.
ConsumerReports.org says that an average-sized residential solar system with about 400 sq. ft. of solar panels costs $18,000. With the federal tax break, the cost is reduced to $13,320.
And that’s just the beginning. You can also receive incentives from the state where you live, as well as manufacturer rebates. You can sell excess energy you collect back to your local utility through net-metering. All totaled, you can reduce hundreds of dollars of monthly utility bills down to a fraction, depending on which panels you choose and how much wattage they’re designed to collect. It’s like paying to upgrade bandwidth for your Internet connection.
The tax credit is available no matter how much you spend on the panels. According to Solar-estimate.org, the cost of solar panels varies among manufacturers, as well as “how much electricity you use, where you live, your roof characteristics and the percentage of your power bill you’d like to eliminate.
To estimate how many panels you’ll need, simply look at your energy bills and find the number of kilowatt hours you use. The average U.S. home uses about 900 kilowatt hours per month.