If you’re looking into purchasing solar equipment, you’ve probably heard of the popular federal tax credit that’s available for those who do so. But have you heard of the various state-level tax credits and loans that are also available for solar power? More and more people are taking advantage of these alternative incentives to help reduce their carbon footprint and become more energy efficient.
If you’re interested in investing in solar power but don’t want to commit to buying equipment, you might want to consider leasing. With a leasing agreement, you don’t own the equipment; the seller does. But you do have to pay for it over a period of time, typically 10 years. During this time, the equipment will generate electricity that you can use, with no monthly fees.
The Federal Tax Credit
If you purchase a solar-related item, such as a solar-powered water heater or solar-rated hardware, you’ll be able to take advantage of the federal tax credit. The credit is only available to purchasers of approved solar-related equipment and it varies by manufacturer; however, it typically ranges from 30% to 40% of the cost of the item. The credit is dependent on several factors, including the price of solar power, your location, and what type of equipment you buy.
If you’re looking to purchase a water heater, the purchase of a solar-powered model could be a financially viable option. Although you’ll have to pay for the equipment upfront, the additional savings will more than cover your costs. Depending on your location and other variables, you could see savings of $500 or more per year, just from the federal tax credit.
The State Tax Credit
If you’re looking to purchase a solar water heater in a location that has favorable tax rates, such as California, you might want to consider investing in a state tax credit loan. These loans are offered by local banks and credit unions, and they can give you a loan of up to $15,000 that you can use to help cover the cost of your solar water heater. The best part about these loans is that they don’t require you to put down a down payment. Instead, you’ll need to sign a promissory note and payback the loan with interest over a period of 25 years.
If you’re looking to purchase a solar water heater in California, the State Tax Credit will likely be your best option. The state doesn’t offer any tax credits for individuals who purchase appliances, like dishwashers or refrigerators, so instead of offering direct financial assistance, the state will try to entice you to invest in renewable energy through its various programs and initiatives. These include things like the California Solar Initiative, which offers rebates and grants for solar projects, and the state’s requirement that 20% of its energy come from renewable sources by 2020.
The Local Solar Farm Incentive
If you’re looking to get your foot in the door for producing your own energy or to help your community reduce its energy usage, you might want to consider setting up a solar farm. A solar farm is when multiple solar modules are connected and integrated into a single system to generate more electricity than would be produced by a single module. When set up correctly, a solar farm can produce several thousand kWh of electricity per year, which is enough to power an average home.
Depending on your location and other factors, you might qualify for a tax rebate or grant through a local or state government for helping to set up a solar farm. Because a solar farm is considered ‘large-scale’ energy production, it often receives generous government funding, creating an opportunity for individuals who might not otherwise be able to financially invest in renewable energy.
When it comes to purchasing renewable energy equipment, there are several different options to choose from. Whether you decide to purchase new equipment or lease existing equipment, you’ll be able to take advantage of the numerous financial incentives available to assist you in your efforts.