To assist solar companies and consumers in claiming new federal tax credits for solar energy, the Solar Energy Industries Association (SEIA) has released a comprehensive tax manual. The SEIA Guide to Federal Tax Credits for Solar Energy, prepared by SEIA and the law firm of Chadbourne & Parke LLP is publicly available for download at www.seia.org.
Federal solar tax incentives enacted in the Energy Policy Act of 2005 allow homeowners a tax credit of 30 percent for qualifying solar electric (PV) or solar water-heating expenditures, up to a maximum of $2,000 per technology. For businesses, the investment tax credit is increased from 10 percent to 30 percent of qualified solar property expenditures, with no cap on the credit amount. These incentives apply to equipment placed in service during 2006-2007.
The Internal Revenue Service is not expected to issue specific regulations on the solar tax credits in the near term. The SEIA tax manual's interpretation is based on legislative language and intent, as well as existing precedent, particularly for the commercial tax credit. Readers are strongly advised to consult their tax professional when using the information contained in the manual.
Under current law, only consumer spending in 2006 and 2007 qualifies for the new solar tax incentives. However, with a long-term energy crisis already having a significant economic drain on the US, the solar industry is urging Congress to extend the solar tax credits as a practical energy solution that can deliver immediate results. ND
