Homeowners who install solar energy systems are eligible for a Federal Investment Tax Credit (ITC) of 30% of the cost of the system. This tax credit can be applied to multiple tax years. The ITC also applies to commercial property owners.
The ITC is set to expire at the end of 2016. Unless the tax credit is extended by federal legislation, homeowners will need to have their new solar systems fully installed and operational by the end of 2016 to be eligible for the tax credit.
The ITC has had a major positive impact on the use of solar energy in the U.S. By increasing demand for solar, the ITC encouraged technological innovations which further drove down the price of solar. The ITC also made solar more affordable, by decreasing the overall cost burden for going solar.
As a result, annual solar installation has grown by 3000% since the ITC was first put in to place in 2006.