How to Claim a Solar Panel Rebate
The federal government, state agencies, and electric companies all offer incentives for homeowners to invest in solar panels. Part of what makes Colorado one of the best states for solar energy is the wide range of rebates, credits, and other benefits for those who make the switch to renewable energy.
It can be difficult for homeowners to be aware of all of the solar incentives for which they qualify. An experienced solar panel company can handle the paperwork and help you apply for all of the discounts and refunds that are available.
Homeowners in Colorado may qualify for multiple types of solar energy incentives at the federal, state, and local level. Let’s take a look at each of these incentives and how you can claim them.
Federal Tax Credit on Solar Panel Systems
Last year the U.S. Congress extended the federal solar tax credit. Homeowners who install solar panels between now and December 31, 2022, can claim a credit on their federal tax return of 26 percent of the total cost of their solar home energy system.
When filing your federal tax return, it is important to account for all of the costs associated with the solar panel installation, including:
- Materials: The cost of solar panels and/or solar cells, as well as electrical wiring, inverters, etc.
- Labor: What you paid for professional contractors to install solar panels, connect the system to your home, etc., as well as fees for permitting and inspection of the property
- Additional components: If you install a solar storage battery, you can claim the cost on your return
The credit also applies to the sales tax you paid on these and other expenditures related to the solar panel installation.
When you file your federal return for the tax year in which you installed your solar energy system, you will need to complete Form 5695 and submit it to the IRS. If you need assistance, a tax professional can help you identify all of the qualified costs you are able to claim on your taxes.
Solar Tax Exemptions in Colorado
You may be surprised to learn that Colorado does not offer a state tax credit to homeowners who install solar panels. The reason for this is fairly simple: With so many homeowners already going solar, Colorado doesn’t have to offer the significant incentives that the federal government and some other states have had to implement.
That said, homeowners in Colorado who add solar panels to their property can take advantage of other tax benefits, including:
- Property tax exemption: Solar panels used to power homes are not subject to state property tax. If you install a solar energy system, your property taxes will not go up.
- You are also likely to increase the value of your home by going solar.
- Sales tax exemption: Colorado also does not charge sales tax on residential solar panels and other components used in solar energy systems.
You don’t have to do anything extra to qualify for these state tax exemptions. These programs represent upfront savings for Colorado homeowners who invest in solar power.
Local Solar Incentives
So far we have covered the federal tax credit and state tax incentives that are available to homeowners throughout Colorado. Different communities in the state are served by different utilities, so there is no uniform rebate or incentive for those who invest in solar panels.
The best way to see what solar incentives are available in your community is to check out the website for your local utility. The Colorado Energy Office provides a helpful map of the state’s electric utilities and the areas they serve.
Two incentive programs for solar worth highlighting include:
Xcel Energy offers two incentives for customers who install solar panels:
- Net Energy Metering: Net metering allows you to “bank” the surplus electricity generated by your solar energy system. The extra juice goes back into the Xcel power grid. When you use less energy than your system creates, you will receive a credit on your monthly utility bill.
- Solar*Rewards: Homeowners who participate in the Xcel Energy Solar*Rewards program earn renewable energy credits for the power their solar panels produce. Xcel Energy pays the owner of the system in exchange for these credits.
Renewable energy credits help utility companies and the states they serve reach targets for investment in renewable energy. These Xcel programs, therefore, benefit not only the homeowners but the state and local community as well.
Fort Collins Utilities
Homeowners in Fort Collins can apply for a rebate of up to $1,000 when they install a solar panel system. Fort Collins Utilities also has a net metering program that can help solar customers save on their monthly energy bills.
Get Started with Solar Panels
At REenergizeCO, we know that you have your choice of companies for solar panel installation projects. It is easy to feel overwhelmed by all of the information and choices you have to navigate to find a quality installer who can do the job for a price that fits your budget.
Our transparent pricing enables homeowners to see how much it costs to make energy-efficient improvements. We also help you apply for rebates and take advantage of other incentives that can help you recoup your initial investment and enjoy additional savings on your solar panel system.
Contact REenergizeCO today to find out if solar energy is right for you. Our professional, experienced, and courteous team serves homeowners in Denver, Fort Collins, and throughout the Colorado Front Range.