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The Investment Tax Credit (ITC) is a federal tax credit that can be claimed on solar energy systems installed in the United States. The ITC is currently set at 30% of the cost of a solar system and is available for systems installed between January 1, 2006 and December 31, 2023. After 2023, the ITC will gradually decrease and eventually will be eliminated for residential solar systems.
To claim the ITC, homeowners must complete and include Form 5695 with their federal tax return. The tax credit can be used to reduce tax liability (the amount that a person owes in taxes after filing their return) and can be carried over for up to five years.
It is worth noting that the availability and amount of solar incentives can vary by state. Some states offer their own tax credits or incentives for solar energy systems. For example, Colorado offers a tax credit of 15% of the solar system’s purchase price, up to $1,000, as well as sales tax and property tax exemptions for installed solar systems, as stated in source. It is recommended to check with local authorities and do research to determine what solar incentives are currently available in your area.
Installing solar panels in North Carolina can be a good financial decision for homeowners because it can save them money on their electricity bills in the long run. However, it is not the right choice for every home. One important factor to consider is the amount of electricity that your home consumes on a monthly basis. Homes that use less than 500 kilowatt-hours (kWh) per month are generally not suitable for solar panels, as the primary benefit of solar panels is the reduction in electric bills. The average energy consumption per month in North Carolina is 1,041 kWh, so most homes in the state will qualify for solar panels in terms of energy usage.
The cost of solar panels in North Carolina is also an important factor to consider. The state has an average price of $2.54 per watt for solar panels, or about $18,669 for a typical 10.5-kW system after the federal tax credit is applied. This is lower than the national average, meaning that the cost of solar panels in North Carolina is relatively affordable compared to other states.
Another factor to consider is the payback period for solar panels in North Carolina, which is the length of time it takes for the panels to pay for themselves through electricity bill savings. The average payback period in North Carolina is 13 years, with a normal range of 10 to 16 years. Solar panels have a lifespan of 25+ years, so after the payback period, homeowners can continue to save money on their electricity bills.
Net metering is a policy that is available to solar panel owners in North Carolina, which allows excess electricity generated by the panels to be sold back to the utility company. The state has a favorable net metering policy, as the Public Service Commission requires utilities to buy back excess electricity at the full retail rate. This means that homeowners will receive credits on their energy bills at the same rate that they pay for electricity.
Finally, the amount of sunlight that a home receives is an important factor to consider when determining if solar panels are a good investment. North Carolina experiences an average of 213 sunny days per year, which is sufficient for solar panels to generate electricity. However, the amount of sunlight that a specific roof receives can vary, so it is important to consider the location and orientation of the home to determine if it is suitable for solar panels.
Overall, solar panels can be a good investment in North Carolina for homeowners who have a high electricity consumption, live in an area with sufficient sunlight, and are able to take advantage of incentives and discounts. It is important to consider all of these factors before making a decision about whether to install solar panels.