30% Federal Tax Credit
The federal government has put forth an incredible incentive for those considering solar power. 30% of the eligible costs related to your solar project can be taken as a federal tax credit. As long as you or your business pays federal income taxes you can take advantage of this incentive.
Here’s a tax deduction example
Supposed your annual gross income is $50,000 and you have $6,000 in tax deductions (mortgage interest, health insurance premiums, etc) leaving you with $44,000 in taxable income. Furthermore, suppose that your tax rate is 25%. In this example you would pay $11,000 in taxes on $44,000 of income. Without the $6,000 in deductions, you would pay $12,500 in taxes on all $50,000 of income. The $6,000 in tax deductions saved you from paying $1,500 in actual tax dollars.
Here’s a tax credit example
Supposed you still make $50,000 annually and you still have $6,000 tax deductions, making your taxable income $44,000. Your tax rate is still 25% which means your total tax liability is $11,000. Now let’s say you had solar installed this year and the total system cost was $35,000. The federal tax credit on a $35,000 system would be $10,500 ($35,000 x 30%). Once the $10,500 solar tax credit is applied to your $11,000 tax liability, you’ll now only have $500 in tax liability.
Understanding Net Metering
Solar array converts energy from sunlight into electricity.
The inverter converts the electricity produced by the solar array from direct current (DC) to alternating current (AC) for use in your home, school, or business and measures the energy produced by the solar array.
The energy is used in your home, school, or business.
The Bidirectional Meter indicates energy usage and excess energy produced.
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