As the year draws to a close, individuals and businesses alike seek ways to optimize their financial standing, often considering tax-saving strategies. Installing solar panels during fall and winter can be a savvy financial move, not only for energy efficiency but also for significant tax advantages. This comprehensive guide explores the tax benefits of investing in solar panels during the end of the year in fall and winter.
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WHY INSTALL SOLAR PANELS IN FALL & WINTER?
It might come as a surprise, but fall and winter are a great time to install solar panels. Despite fall and winter not being as warm and sunny as spring and summer, this time of year is one of the best times to install solar. Not only are there significant financial and tax benefits to installing solar panels in fall and winter, there are several other significant benefits to installing solar in the colder months.
GET THIS YEAR’S TAX BENEFITS
By installing solar panels before year-end, you could qualify for special solar tax incentives for this year. (We will discuss the numerous solar incentives available to homeowners, businesses, agricultural operations, and non-profits below). That could mean huge tax relief for next year and jumpstart your solar savings. It could also help lock-in solar currently available solar incentives that could be reduced or expire next year.
BUSINESS EXPENSE & DEPRECIATION TAX ADVANTAGES
The tax advantages of installing solar in fall and winter also extend to businesses. Not only can businesses take advantage of the 30% solar tax credit, they also have access to special solar incentives and tax benefits. One major tax accounting strategy businesses can utilize with solar is end-of-year expense timing. If a business is sitting on a large profit for the year, that income is going to be taxable come Jan. 1. That’s why many businesses will make large purchases in fall and winter to utilize unspent funds for investment back into the business and avoid taxes on that income.
And the tax benefits don’t end there. Businesses can also depreciate the cost of their solar panels through the Modified Accelerated Cost Recovery System (MACRS). As a large purchase that will be used overtime, a solar system’s cost can be deducted from taxable income via a so-called 5 year ‘depreciation’ (rather than 100% immediately as a direct ‘expense’). While 30% of the cost is recovered directly as a credit against tax liability for the year of installation (via the federal solar tax credit), 85% of the full system cost can also be deducted from taxable income over time via ‘depreciation. Depending on the tax bracket, roughly 12-25% of the original system price may be recouped this way.
FASTER INSTALLATION TIMELINES
While many believe spring and summer are the best times to install solar panels, the fall and winter seasons often provide faster solar installation timelines. Solar companies are generally less busy during this period, enabling quicker scheduling and installation, which can ensure that systems are up and running before tax deadlines. (We’ll talk solar tax incentives below).
QUICKER PERMITTING & INSPECTIONS
Fall and winter are also slow seasons for many permitting and inspection departments. As building projects slow down during the cold months, many towns and cities issue fewer and fewer building permits. The same is true of inspections by town and utility officials, which slow down considerably as construction projects slow. This lighter workload for city clerks and inspectors can be great if you are installing solar panels. Permitting and inspections can be one of the most time-consuming aspects of a solar install. Some town and city permitting departments can take weeks to respond to permit requests. And scheduling an inspection can be cumbersome as well.
But if you install solar during fall and winter, these permitting and inspection headaches are much smoother.
INSTALL IN TIME FOR PEAK SOLAR SEASON
By installing solar panels in fall and winter, your solar panel system will be ready for spring and summer sun! Just think about it, would you rather be installing solar panels DURING peak solar season or BEFORE. As soon as the sun is at its most intense during spring and summer, your solar panels will be producing so much energy and saving you money.
And don’t worry. Your solar panels won’t be sitting idle during the fall and winter. Even during the cold and dark months, solar panels still produce energy! Click here to read how solar panels still produce significant energy during winter.
Read more about why installing solar panels in fall and winter is a great idea: Top 5 Reasons to Install Solar Panels in Fall & Winter.
FINANCIAL INCENTIVES FOR SOLAR PANELS
There are numerous solar incentives for homeowners and businesses who install solar panels. These solar incentives come from federal, state, and local governments, as well as utilities and non-profit organizations. By installing solar panels before the end of the year, you could be eligible for multiple solar incentives on next year’s taxes. Here is a preview of the top solar incentives available:
FEDERAL SOLAR TAX CREDIT
The federal government currently offers a 30% solar tax credit (also known as the Investment Tax Credit, or ITC). This solar tax credit is unlimited and covers 30% of all expenses related to your solar installation. This includes labor, materials, as well as battery backup/energy storage if installed alongside solar panels. The solar tax credit can be carried over for up to 3 years if your tax liability is not enough to use the full tax credit.
Read more about the federal solar tax credit.
STATE & LOCAL SOLAR INCENTIVES
Beyond federal benefits, many states and local governments offer additional incentives, such as rebates, tax credits, or performance-based incentives. These incentives can significantly reduce the overall cost of a solar installation. State and local programs may have different deadlines and conditions. Therefore, starting the installation process before year-end allows homeowners and businesses to maximize these benefits.
UTILITY SOLAR INCENTIVES
Utilities often provide various incentives to encourage customers to adopt solar energy, promoting sustainability and reducing overall energy demand. These incentives can vary significantly by region, utility company, and the specific energy policies in place. Some common solar incentives offered by utilities include tax credits or exemptions, rebates, feed-in-tariffs (FiTs, where you get paid for solar energy you don’t use), solar renewable energy credits (SRECs), and other generous solar incentives.
SOLAR INCENTIVES FOR BUSINESSES
There are numerous solar incentives for businesses who install solar panels. The Modified Accelerated Cost Recovery System (MACRS) allows you to depreciate your solar panel investment over a shorter timeframe. Translation: you can recover the cost of your solar panels faster, saving you more on taxes!
SOLAR INCENTIVES FOR FARMERS
Special USDA grants are available for farmers, ranchers, and other agriculture-based businesses who install solar panels. From grain to cattle to wine and honey, farming and ranching operation could receive generous grants for going solar and savings loads on utility costs.
Read more about available solar incentives in Oregon.
Contact Green Ridge Solar today to see which solar incentives you qualify for. We do all the research for you and apply for every incentive you qualify for.
MAXIMIZE TAX & FINANCIAL BENEFITS; INSTALL SOLAR IN FALL & WINTER
Installing solar panels in fall and winter not only leads to immediate energy savings but also offers substantial tax benefits that can positively impact a household’s or business’s financial outlook. By taking advantage of federal, state, and local incentives, individuals can significantly reduce the upfront cost of installation and lay the groundwork for long-term savings.
Given the impending reduction in federal tax credits, the time to act is now. Making the decision to invest in solar before the year ends can lead to a more sustainable and financially prudent future for both individuals and businesses.
Remember, seeking advice from a qualified tax professional and reputable solar installation companies can ensure you make the most of the available incentives and the installation process. With careful planning and timely action, embracing solar energy in the latter part of the year can be a smart and advantageous decision for years to come.
To find out what solar incentives and solar tax breaks you qualify for, contact Green Ridge Solar today.
To find out how much you could save with solar panels, use our Solar Calculator. It provides an estimate of your solar savings and a rendering of solar panels on your roof. Check it out!
Estimate your total savings, payments, and total energy usage with our FREE solar calculator.
