Are Solar Tax Credits Due For A Boost?

The solar tax credit is in need of a boost, in terms of the amount that is available. There are some negative feelings on whether additional tax credits should be given in the wake of the recent economic stimulus program. A look at both sides of the question and allow you decide whether or not solar tax credits are due for a boost.

Emergency Economic Stabilization Act

The Emergency Economic Stabilization Act of 2008 that was signed into law by former President George W. Bush extended the solar tax credit. This extension makes the credit available for 8 additional years. It also eliminated the flat credit of $2,000 with a credit of 30 percent of the cost of the solar system. The system needed to be installed by a certified installer in order for the credit to be claimed on the taxpayer’s Form 1040 or 1040A filing.

As an example, a homeowner that purchased a solar energy system for $15,000 and paid another $5,000 in installation costs paid a total of $20,000 for the system.  On their tax filing, they were able to claim a credit of $6,000 ($20,000 × 0.30) against their tax liability.

Argument For Boosting the Solar Tax Credit

Those in favor of the tax credit see the extension as a boon for the solar energy industry and taxpayers. The change in the amounts from $2,000 to a percentage of costs means that more taxpayers are incentivized to upgrade their homes and install solar energy systems. This translates into a lowered dependence on foreign oil and a depletion of natural resources, such as coal. Using the credit provided under the legislation allows homeowners to seriously consider adapting to solar energy as an alternative energy source.

Arguments Against Boosting the Solar Tax Credit

Those against this credit and other types of programs argue that boosting the solar tax credit does not solve the country’s long term energy problems. The money used to fund this tax credit, some $800 million made available in the bill, could be used to increase offshore drilling and provide incentives to oil companies to discover new energy sources. Encouraging the use of alternative energy sources such as solar power is not practical for most.

Considering the Question

Whether you are for or against the solar tax credit, it should be understood that the program did receive a significant boost in 2008 as a result of the pending financial disaster.  For at least 8 more years, taxpayers that install solar energy systems will receive increased benefit in the form of the solar tax credit. When the program is up for consideration again, the argument can be visited again, as to whether or not the solar tax credit should be boosted.

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