Federal Solar Tax Credits

The federal tax credit is not like a standard deduction; its value is not affected by your tax bracket. When buying a solar system, the tax credit is 30% of the purchase price.  If, for example, you install a solar electric system for $40,000 you would be able to take a $12,000 tax credit on your taxes next year.  Here are a couple examples of the impact of this tax credit:

Scenario One: The Smiths

John and Jane Smith have a combined annual income of $150,000.  Due to their deductions this income is adjusted to $131,300, with a total tax liability for the year of $24,400.  The total tax withholding the Smiths' employers deducted throughout the year was $20,000.  The Smiths install a Hamilton Solar system that costs $40,000 – making them eligible for the $12,000 tax credit.

Scenario Two: The Roberts

Now let’s look at the Steve and Suzy Robert.  Steve and Suzy have a combined annual income of $75,000.  Due to their deductions this income is adjusted to $56,300, with a total tax liability for the year of $6,810.  The total tax withholding the Roberts' employers deducted throughout the year was $7,200.  The Roberts install a Hamilton Solar system that costs $40,000 – making them eligible for the $12,000 tax credit.