The average American will shell out $525,037 in taxes throughout their lifetime. Nearly two-thirds will go toward paying taxes on earnings. The rest will be for real estate, motor vehicles, and purchases.
That’s a lot, but it doesn’t even include electricity bills, which, in 2021, rose by $5 a month on average. As a result, US consumers spent almost $1,500 that year on electricity alone.
Fortunately, going solar can help cut electricity bills.
What about property taxes, though; will you pay more if you install solar panels?
Keep reading, and we’ll tell you the answer below.
When Going Solar Increases Property Taxes
Installing solar panels can raise your taxes if your home is in a state without a property tax exemption.
A property tax exemption, in turn, lets you exclude the value added by a solar energy system to your property. Thus, if your state doesn’t offer this, you’d have to pay the tax rate imposed on a solar energy system purchase.
Only a few states don’t offer solar property tax exemptions, such as Arkansas and Delaware. There’s also no property tax exemption for solar in Georgia, Idaho, and Kentucky.
When Solar Won’t Affect Property Taxes
A property tax exemption eases the economic burden of installing a home solar system. Thus, its exclusion makes it easier for homeowners to afford to switch to solar.
So, it’s no wonder that 36 U.S. states offer some form of solar property tax exemption. If you live in one of these states, you don’t have to pay extra taxes for solar, yet still enjoy the value it adds to your home.
Colorado is one example; it doesn’t charge solar system owners additional property taxes. It doesn’t impose a sales tax for solar equipment, either. Moreover, as per this Blue Raven solar power guide, equipment prices in CO have gone down by 55% in the last five years.
Florida, Maryland, and Minnesota also have solar property and sales tax exemptions. The same goes for Iowa, New York, and North Dakota, but their property tax exemption only runs for five years. Other states with restrictions are Kansas (10 years) and Massachusetts (20 years).
Federal Tax Credit to the Rescue
Suppose you have to pay property taxes on your solar system as you live in a state without a tax exemption. Don’t worry, as you can still reap the benefits of going solar with the federal investment tax credit (ITC).
The federal solar ITC is a tax credit based on the amount of the solar property investment. This 2022, the credit rate sits at 26%. So, if you install a system this year and it costs you $15,000, you can deduct $3,900 from your federal income taxes.
The federal ITC for solar investments is phasing down in 2023, though, when it drops to 22%. So, better act fast and get your system in service by 2022 to qualify for the 26% credit.
Start Saving With Solar Now
Whether you live in a state with a property tax exemption or not, going solar can save you a lot in the long run. Best of all, it can help preserve the planet, considering that it’s one of the cleanest energy sources. That should be enough reason for you to switch ASAP.
Did you like this article and would love to read more? Then check out our latest news and blog posts for other informative guides!