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Solar ITC 2021: The Last Year for the Residential Solar Tax Credit

Updated: Mar 27, 2023

It’s Solar ITC season! There is a chill in the air, the days are getting shorter and many homeowners still can’t believe how much money they spent on electricity bills running the air conditioning all summer.

sunlight hitting solar panels during the fall in denver colorado
The trees in the background are changing colors, but these solar panels still receive plenty of daily sunlight.

For many people, a solar energy system is a great way to lower dependence on utility energy and invest in a home’s electricity costs. Savings go even further as solar systems work well with some utility’s new time of use billing structures.


Over the past few years, the fall months have consistently been the season in which solar panel installation companies are at their busiest. Here’s why:

  1. Many people install solar panels as a reaction to high electricity bills in the summer. This tends to create longer installation timelines as new projects stack up.

  2. The federal solar investment tax credit lowers at the end of each year. This causes many people to begin exploring their options in October and November.

What is the Solar ITC?


The solar ITC is a “dollar-for-dollar reduction in the amount of income tax you would otherwise owe” provided by the U.S. Department of Energy. With the solar ITC, a fixed percentage of the total cost of a solar PV installation can be directly deducted from federal income taxes.


Here’s a quick breakdown of how it works:

  1. You purchase a solar energy system for $10,000. Woohoo!

  2. You apply the federal solar ITC of 26%.

  3. You save $2,600 on the cost of your solar installation as a dollar-to-dollar reduction on federal income tax.

  4. The total cost of your system is reduced to $7,400 and your solar panels will generate electricity for over 25 years!

Solar ITC 2021: Federal Tax Credit Decline


Of course, all good things must come to an end. Here’s an image from our article at the end of 2019 that shows how the solar ITC has declined over the past few years:

Many people are aware of the solar ITC’s planned reduction in value, which makes the end of the year “crunch time” with home and business owners looking to claim their tax credit. Officially, a solar energy system must be up and running by December 31 in order to qualify for that year’s reduction.


2021 is the Last Year for the Residential Solar ITC


Critically, it is important to notice that the solar ITC will only remain available to commercial businesses beginning in 2022. Businesses will be able to claim 10% of the total cost of their system for as long as the credit is available (currently, there is no set end date).


With this in mind, 2021 is the last year for homeowners to lower the cost of a PV solar panel system by 22%. Don’t wait until it is too late! If 2020 has passed you by, solar panels make for a great new years resolution. In fact, we once wrote an article on how January is the best month to buy solar energy.


Get It Before It’s Gone


As the calendar gets thin, the days are closing in on 2020. If you are a Colorado or southern Wyoming resident interested in reducing the cost of your system by 26%, there still may be time to get your solar panels producing clean energy before the tax credit lowers once again.


The best way to guarantee a shot at the solar ITC is by using a local company with a great reputation. Give us a call at 720-582-8258 to get started or let us know how we can help with your questions about independent, solar energy. Our installation timelines are shorter than most large companies, so please, do not hesitate to contact Apollo Energy today for more information.





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