The State-based Solar Tax Credit in 2019 and Beyond

Utah Solar Incentives
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Utah's state solar tax credit

The fight for power within the electric industry is real. In 2017, Rocky Mountain Power, Utah’s largest electric utility, proposed a change to its Utah solar metering program. A settlement was reached, and the utility agreed to implement the transitional program.

After the transitional program, the proposed metering rates will be re-assessed. This agreement, however, didn’t take into account the state solar tax incentive. This incentive was set to phase-out during the transitional program—skewing the data.

Thanks to hardworking solar advocates, Gov. Herbert signed Senate Bill 141 into law in March of 2018. This law extended the state solar tax credit by two years.

Utah State Solar Tax Credit

Utah’s solar tax credit currently is frozen at $1,600. Every Utah customer that installs solar for their home will get this credit until 2021. Starting in 2021 the credit will resume its phase down until it reaches zero at the end of 2023.

Utah solar tax credit phase down
Photo credit: Go Solar Group

The Solar Income Tax in Utah

Because Utah has a state income tax they are able to use this tax to incentivize solar. It is a dollar-for-dollar credit deducted from the Utah state taxes that you would have owed. If you don’t owe state taxes you can’t take advantage of this credit.

Utah Solar Tax Credit Carryover

Because the Utah tax credit is dependent on how much taxes you owe it will not credit more than you owe. Instead, the credit will roll over to the following tax year.

This credit will carry over for up to four years.  This means that even if you don’t owe the full tax credit you will eventually get credit for it.

Using the solar state tax credit will help you save money on your solar array.  However, you can save even more if you combine it with the federal solar tax credit.

Saving More With the Federal Solar Tax Credit

This solar credit is called the investment tax credit (ITC). It allows the middle class the ability to afford solar. Because this credit cuts the price of solar it increases the return on investment of solar.

Taking Advantage of the Federal ITC with the Utah Tax Credit

The federal solar tax credit is set up so only those that owe federal taxes can qualify for it. These credits can also be carried over from one year to the next. So if you don’t owe the full amount in the first year, you don’t need to worry.

Benefits of Installing Solar in 2019

As of 2019, the Federal ITC covers 30 percent of solar costs. However, unlike the state solar tax credit after 2019, the federal ITC will be reduced to 25 percent.

Those that take advantage of solar now will be saving the most. If solar is something that you can qualify for, it doesn’t make sense to wait.

Unfortunately, there are many out there that still can’t qualify for solar. For those of you who want solar, but the timing is off, you don’t have to worry about solar disappearing.

The Future of Utah Solar Panels

By 2022 this federal incentive will no longer be available for residential installations. And by 2024 both of these solar incentives will no longer exist. However, dissolving these solar incentives does not mean solar companies will collapse.

Solar Companies are Prepared for Phase Down

When these incentives were first put into place, the price for solar was astronomical. The chances of anyone affording a solar array were slim to none unless you had cash to burn.

These incentives have helped increase the solar market and decrease solar prices. However, it was never meant to be a permanent solution. Quality solar companies will be prepared when these incentives are no longer available.

In fact, the solar industry is already preparing for the inevitable. The Solar Energy Industries Association (SEIA) has proposed a plan to combat price increases.

A Solution to Price Increases: Streamlined Solar Permitting

The SEIA has found that a majority of soft costs come from permitting. On average these costs equal about 30 percent of the cost to install solar.

Permitting is expensive because it varies with each location. Permits change not only from state to state but from city to city. The SEIA is proposing these permits switch to standardized online permitting and instantaneous permitting for qualified projects.

This is a huge leap that both local, state, and federal governments would have to take. However, it isn’t impossible. Some states are already starting to implement legislation that will enable streamlined solar permitting.

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