Solar incentives have been around since Solar Investment Tax Credit went into effect in 2006, and has seen great success in the growth of solar. Initially set to expire at the end of 2007, it has been extended by Congress a number of times. Currently it is set to expire at the end of 2023, and there is reason to believe that it won’t be extended beyond that.
Even in states as large and sunny as California, the state government has decided to end their tax incentive programs for going solar. To top it off, their incentive program ended two years ahead of its expected deadline.
Is time running out to claim these incentives?
What Federal Tax Credits Are There?
If your solar system had been installed prior to 2020, you would have gotten a 30% federal tax credit, rather than the 26% that is available through 2022. At the beginning of next year, it is set to drop another 4%, bringing the tax incentives down to 22% in 2023. However, the sun is setting quickly on this federal tax credit, as it is set to expire at the end of 2023.
Doing some quick math – if your solar system were $10,000, this means that you would pay $2600 less in taxes this year thanks to the tax credit. If you wait until next year, that amount goes down to $2200. After that, since the federal tax credit is set to expire, you will be paying the whole amount, with no tax credit. Depending on the size of solar system you have installed, this could amount to thousands of dollars you would be saving by taking advantage this year instead of waiting until next year.
While President Biden made it evident that renewable energy is a priority, the legislative branch of the federal government has had trouble passing many of the bills that have been introduced. It took months for the $1 trillion Infrastructure Bill to get passed, which could also mean getting an extension on any tax credits could meet similar resistance.
Update: With the passage of the 2022 Inflation Reduction Act, the tax credit changed to 30% through 2032. Which means there’s still time to install solar panels in Kansas City and start saving.
Solar Incentive Options for Missouri and Kansas Homeowners
Missouri Homeowners
If you live on the Missouri side of Kansas City, you’re in luck. Missouri’s Senate Bill 564, passed in 2018, gives you another option for solar rebates. This bill requires the utility companies to make rebates available for new or expanded electric systems up to 25kW. An average U.S. residential home uses just under 900 kWh per month, or around 30kW per day. This means if you build up to that 25kW allotment, you could potentially offset over 80% of your energy consumption in a given day.
There is also the potential that your solar panels create more energy than you use, in which case the energy companies would pay you for your energy creation. Different energy companies offer different rebate amounts. For most residents in Missouri, you would be eligible for a $0.25 per watt rebate from KCP&L.
Much like the federal tax credits, these rebates for Missouri residents will not last forever either. Currently, this rebate plan is set to expire at the end of 2023, the same time as the federal tax credits.
Kansas Homeowners
Unfortunately, if you live on the Kansas side of Kansas City, the state and local governments do not offer any specific rebates for its residents. However, this has not stopped Kansans from making the switch to solar. Learn more about how one couple in Kansas were the first in their small town to go solar and are now saving hundreds of dollars a month on their energy bills.
What Happened To Solar Incentives In California?
California had one of the largest photovoltaic incentive programs in the U.S. However, the California Solar Initiative (CSI) program winded down two years early due to reaching their goal of installing 1940 MW of solar.
This program winding down changed the solar landscape in a pretty dramatic way. As many public utilities used their own incentive application as a supplement to the CSI application, these utility companies had to create new systems to streamline applications. These hurdles, including the main incentive program coming to an end, seems to not have deterred solar installations in California. Residents still see the larger longer term financial benefits by moving to solar.
Are Solar Incentives Disappearing?
The short answer is: yes.
Solar incentives are set to decrease at the federal level at the end of this year, and completely disappear at the end of 2023. While this tax credit has been extended a couple of times, the difficulties in getting bills passed in the legislative branch of the federal government, combined with the upcoming midterm elections means it is anybody’s guess as to whether it will be extended or not.
Missouri incentives are heading down a similar road as well, ending the mandatory rebates at the end of 2023. Missouri was late to the party and only instituted the rebate program in 2018, which does not give much hope for a chance of any extension on this program.
This means if you want to guarantee to get the most out of a solar installation on your property, it would be best to get the process started today.
Start Your Switch To Solar Today
If you are looking for the best solar company in Kansas City, look no further than KC Solar. They are your local Kansas City solar panel installation experts. Once you schedule a no-pressure site visit, our experts will help you understand what solar system specifications would be best for your home or business.
KC Solar is the only local solar company in Kansas City with KC natives who own and operate the daily activities of the business. What does that mean for you? We care about you because we care about this city, and we only want the best for it.
And be sure to download our Free Solar Panel Buying Guide for more information.
We look forward to serving you!
