Solar rebates work like refunds and are paid to customers “after” they install a residential solar system. Different states have different solar rebate programs. Here, in Bethlehem PA, residents can avail of the federal income tax credit rebate to reduce their investment in solar by as much as 26% in 2022.
Sadly, Pennsylvania does not have a state solar rebate of its own. However, it has other attractive incentives like net metering, and renewable energy certificates (SREC) to sweeten the deal for you.
Now, let’s get you up to speed on the federal solar rebate available in Bethlehem PA.
What is the Federal Solar Tax Credit?
A tax credit is a dollar-to-dollar reduction in the annual income tax you owe to the government (IRS). The credit is deducted not only from the year-end tax obligation amount but also on the year-round income tax that you’ve likely paid when you received your paychecks.
So, even if you do not owe additional taxes at the end of the year, the income tax credit can refund some or all of the money you paid in income taxes throughout the year.
At present, in 2022, the federal income tax credit is set at 26% of the total installation cost of your photovoltaic (PV) system, including equipment, labor, and other installation services. In 2023, the rebate will be dropped to 22%.
Eligibility for Federal Income Tax Credit?
Your eligibility for the income tax credit would be determined based on the following factors, but remember, these are general guidelines only. For more specific advice, based on your unique case, speak to your tax advisor or get in touch with us.
- The residential solar system must be installed at your primary or secondary residence in Bethlehem PA
- You should own the property where the PV system is installed. Rented properties do not qualify for the income tax credit
- To qualify for the income tax credit in 2022, your PV system should be installed and activated the same year
- If you cannot avail the full benefit of the income tax credit this year, you can carry forward it to next year and avail it
- The tax credit is available only for “original” installations. If your purchase a currently deployed PV system, you do not qualify for the tax credit
- The PV system must be purchased in cash or through solar loans, and not through solar leases or PPA arrangements
- The installed capacity should not exceed your home’s electricity consumption