The Energy Policy Act of 2005 was the first federal tax break given to people who chose renewable over nonrenewable energy. Before this act, there was little incentive for people to buy solar outside of environmental concerns. Few state programs offered tax breaks to people who bought expensive panels, and there was very little press about the benefits of solar. Today, there's a whole new appreciation for the sun's power and how it can help millions keep their homes electrified.
The Energy Policy Act of 2005 gives homeowners who buy solar panels a tax credit up to $2000 maximum, or 30%, of their investment. This was extended to existing homes from 2005 to 2007. On February 4, 2008, the Energy Policy Act of 2005 was extended to cover almost any home in the U.S. that uses solar energy as its primary source. This includes new homes built between the end of 2005 to January 2009. So, if you've built a new home and installed solar panels as a part of its construction, now you can also benefit from this great tax credit in your 2008 taxes.
The next bill that was recently passed that provides further tax credits is the Emergency Economic Stabilization Act of 2008. This extends most of the Energy Policy Act of 2005, but adds a bit more credit if you're planning on doing some improvements in 2009. First, this bill removes the $2000 credit cap for some solar panel systems. This means if you buy a solar panel system for $30,000, you can get a credit well above $2000. You can get it up to $10,000 when you itemize your tax deductions! If you previously received a tax credit for your solar system, and you're system qualified well over the $2000 cap, you may qualify to retroactively receive a credit for the remaining 30%.
Depending on what state you live in, you may also find many great state tax incentive programs for switching to solar. New Mexico is one of the friendliest solar states in the US. New Mexico allows its state residents to qualify for a $9000 tax credit when you install a solar system, and they also protect the rights of homeowners to receive checks from electric companies for net-metering.
Florida, Vermont, Minnesota, Washington, and New York carry no sales tax whatsoever on solar panels and their accessories. Also, Texas and Virginia won't tax your new solar panels as an added property value (which can save you a lot of money in property taxes). California allows you to deduct the interest you pay on an energy loan in your taxes. New York, South Carolina and Arizona all allow you to claim an extra 25% tax credit on your residential solar system.
With so many tax incentives and special programs, you should do some homework before you decide to plunge into solar. A solar panel system is a big investment, and the more research you do, the more money you stand to get back!
Philip Richards knows all about solar power. Check out how he built his own home solar power at http://www.EasyHomeSolarPower.com. Or you can check out his blog on solar power at http://HomeSolarBlog.com
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