Save Money with Florida's Solar Panel Tax Credit

Sunshine abundance in Florida allows residents access to cheap or almost free solar energy. You can tap into this cheap energy by installing solar panels in your home. Going solar assures you of a consistent energy supply, cushioning you from frequent grid outages. But what is the cost of going solar in Florida? While the initial costs can be high, tax credits and other incentives make solar energy affordable. The solar panel tax credit in Florida provides state incentives in addition to the 30% federal solar tax credit. A combination of state and federal incentives allows homeowners to save big when switching to solar energy.

All About Florida’s Solar Panel Tax Credit

A tax credit is a dollar-to-dollar amount you can claim on your tax return. The tax credit reduces the amount you owe the government on the applicable financial year. You can claim tax credits on many investments, but here, we will only look at solar tax credits in Florida.

Florida homeowners can benefit from various tax credits when they go solar. They can claim a 30% federal tax credit— a nationwide incentive for homeowners to switch to green energy. You claim these credits when filing your tax returns. For instance, if your income tax amounts to $10,000 and you have a tax credit of $3000, you only pay $7000.

How Much Can You Save?

The amount saved when you benefit from the federal tax incentive depends on the cost of solar panels. You can save up to $5,958 for a 6 kW solar system that costs $19,860 ($19,860*30%). You can deduct the $5,958 from your income tax for the year.

In addition to the tax credits, you also save on your energy bills. For example, if your average monthly energy bill is $256, you can save the entire amount by going solar. That means, a 6 kW solar panel that costs $13,902 after tax credit has a payback period of 4.5 years [$13,902/ ($256*12)]. Since solar panels last 25-30 years, you can reduce your energy cost to almost zero after the payback period.

Steps to Claim Your Tax Credit

The tax credit is deducted from your income tax. You claim the tax credit when filling out your IRS Form 1040. Fill out Form 1040 and include your tax credit. You will also be required to attach receipts to support your claim. A solar installation expert can help you claim tax credit if you face challenges.

Other Solar Incentives in Florida

In addition to the 30% federal tax credit, the solar panel tax credit in Florida allows you to claim:

Solar sales tax exemption
Property tax abatement for renewable energy

Solar Sales Tax Exemption

Florida charges a 6% sales tax when you purchase most products. However, solar purchases are exempted from this tax. You do not pay the sales tax on solar.

Property Tax Abatement for Renewable Energy

Installing solar panels increases the value of your home. An increase in home value translates to higher property taxes. However, Florida does charge higher property taxes if the increased value results from solar panel installation.