Does Florida Offer A Solar Tax Credit?

Solar tax credits are an incentive provided by some states and the federal government to encourage the adoption of solar energy. These credits allow homeowners, businesses, and even solar installation companies to deduct a certain percentage of the cost of installing a solar energy system from their taxes.

The goal of this article is to evaluate whether the state of Florida currently offers any solar tax credits to support solar adoption. Tax credits can help offset the upfront costs of going solar, which remains one of the biggest barriers for many homeowners and businesses interested in utilizing solar power.

What are solar tax credits?

A solar tax credit is a government incentive that allows homeowners to deduct a certain percentage of the cost of installing a solar energy system from their income taxes. Solar tax credits help make the upfront cost of installing solar panels more affordable.

Solar tax credits work by letting homeowners subtract the credit amount directly from the taxes they owe the government. For example, if a homeowner is eligible for a $5,000 solar tax credit and owes $8,000 in income taxes for the year, with the tax credit their tax bill would be reduced to $3,000. This savings directly reduces the out-of-pocket costs of going solar.

The main benefits of solar tax credits include:

• Lower cost – Solar tax credits can cover 30% or more of system costs.
• Payback period – Shortens the time it takes to recoup solar installation costs.
• Consumer adoption – Encourages more homeowners to go solar by improving affordability.
• Economic stimulus – Drives job growth in renewable energy.

In summary, solar tax credits are an incentive designed to promote the adoption of residential solar energy. By reducing the tax burden of homeowners who install solar panels, tax credits help make the transition to solar power more financially viable.

Solar incentives in Florida

While Florida does not currently offer a state solar tax credit, there are other solar incentives available to residents. Florida has implemented a solar rebate program and options for net metering, which can help make installing solar panels more affordable.

The Florida Solar Rebate Program provides rebates for homeowners who install solar panels. The amount of the rebate depends on the size of the solar system and is paid out over several years. Rebates are awarded through a lottery system due to high demand.

Net metering allows residents with solar installations to get credit for excess electricity they generate and send back to the grid. This helps offset the cost of electricity used from the grid at night or on cloudy days. Florida requires all utilities to offer net metering.

Several municipalities and utilities in Florida also offer solar incentives like rebates and low-interest loans to encourage local solar adoption. While not as significant as a state tax credit, these programs can still help reduce the upfront cost of going solar for homeowners and businesses.

Past solar tax credits in Florida

Florida previously had state tax incentives for residential solar installations from 2006 to 2016. The Florida Renewable Energy Technologies and Energy Efficiency Act provided rebates and tax credits to residents who installed solar panels or made energy efficiency improvements to their homes.

The solar tax credit allowed homeowners to claim a credit of up to $20,000 or 50% of the cost of purchasing and installing a new solar system. To qualify, the solar panels and installation had to be done by a licensed contractor. The tax credit could be claimed on corporate or personal income tax returns.

However, the solar tax credit program was discontinued in 2016 after the Florida legislature did not renew funding. The tax credit had been very popular among homeowners going solar, with over 18,000 residents claiming it from 2012-2015. But there were concerns about the growing cost to the state budget as solar installations increased.

Current solar tax credits in Florida

Florida does not currently offer any state-level tax credits or rebates for installing solar panels or solar energy systems. Previously, the state had up to a $20,000 tax credit, but it was allowed to expire at the end of 2016. Although solar advocates pushed for the credit to be renewed, the Florida legislature declined to extend or replace it. This means there are no direct state-funded incentives for going solar in Florida at this time.

Without a statewide solar tax credit, the only financial incentives available for Floridians who install solar are federal tax credits, some local/utility rebates, and the general savings on their electricity bills. The lack of a Florida tax credit has been criticized by solar industry groups for making it harder for residents to afford solar panel systems.

Impact of No State Tax Credit

Florida is one of the few states that does not offer a state tax credit or other incentive for residential solar panel installation. This has likely slowed solar adoption compared to leading solar states.

Without a state tax credit, the payback period for a solar system in Florida is longer than in states with credits. This can deter residents from choosing to go solar, since the upfront investment takes longer to recoup. Tax credits help reduce the payback period and make solar more financially attractive.

For example, California has a state tax credit worth thousands of dollars combined with net metering and high electricity rates. This perfect storm of solar incentives has helped make California the nation’s leading state for solar adoption with over 1 million solar installations.

Florida has ample solar potential with its sunny climate, but the lack of a state tax credit has hampered growth. Florida ranks only 13th nationally for installed solar capacity, well behind solar leaders like California, Arizona, New Jersey, and others with strong state tax credits.

If Florida offered even a modest state tax credit, it could incentivize more residents to go solar. More solar panels would create jobs, reduce carbon emissions, and give homeowners more control over electricity costs. A state tax credit could help Florida tap into its enormous solar power potential.

Other state solar tax credits

Florida’s lack of a state solar tax credit stands in contrast to incentives offered in other sunny U.S. states. Some examples include:

• Arizona – Offers a personal tax credit up to $1,000 or 25% of the cost of installation.

• California – The California Solar Initiative offers cash back starting at 15 cents per kWh for systems under 1MW.

• Colorado – Xcel Energy customers can claim a Solar*Rewards rebate up to $2,500.

• Massachusetts – Provides personal tax credit up to $1,000 or 15% of the project cost.

• New York – Offers a tax credit up to 25% of solar electric system costs, capped at $5,000.

These incentives in other sunny states make installing solar panels more affordable. Florida’s lack of a state tax credit reduces the financial motivation for residents to go solar.

Future outlook

Although Florida currently does not offer a statewide solar tax credit, there is optimism that could change in the coming years. Supporters of renewable energy in the state legislature have indicated interest in proposing new solar incentives, including potential tax credits. For example, some lawmakers have suggested offering credits or rebates for businesses that install solar panels. There is also discussion around implementing property tax exemptions for homeowners who go solar.

Additionally, the falling prices of solar panels and improving return on investment could build momentum for policy changes. As it continues getting cheaper to install solar, the economic benefits may push Florida to pass tax credits and other incentives to further accelerate adoption. Some projections indicate the state could reach “grid parity” within 5-10 years, meaning the cost of solar electricity falls below that of power from the grid.

Advocacy groups such as the Florida Solar Energy Industries Association are actively campaigning for the state legislature to implement a tax credit. They argue it would create jobs, reduce carbon emissions, and allow more Floridians to access affordable clean energy. With the federal tax credit set to phase out, there is urgency for state-level policy to fill the gap. While the political landscape makes it challenging, solar supporters remain optimistic that mounting evidence of solar’s benefits could soon compel legislators to enact a Florida solar tax credit.

Federal Solar Tax Credit

Even though Florida does not currently offer a statewide solar tax credit, residents can still benefit from the federal solar tax credit. The federal government provides a tax credit known as the Solar Investment Tax Credit (ITC) that allows homeowners to deduct 26% of the cost of installing a solar energy system from their federal taxes.

This credit applies to both residential and commercial solar installations. There is no cap on the amount that can be claimed, and the credit can be carried forward to offset tax liability in future years. The ITC is scheduled to decrease to 22% in 2023 before expiring completely in 2024 for residential projects.

Therefore, Florida homeowners who are considering going solar should try to complete installations before the end of 2022 to receive the full 26% credit. The federal ITC can help offset a significant portion of the upfront cost of a solar array. While not as robust as some state solar incentives, the federal credit does provide financial assistance for Florida residents interested in solar power.

Conclusion

At this time, Florida does not offer a state tax credit for residential solar panel installations. Previously, Florida had renewable energy tax credits that provided incentives for homeowners to go solar. However, the last of these credits expired in 2016.

Without a state tax credit, installing solar panels in Florida is less financially beneficial compared to states with ongoing solar incentives. However, homeowners may still be eligible for the federal solar Investment Tax Credit which allows taxpayers to deduct 26% of solar installation costs from their federal taxes in 2022.

In conclusion, while Florida does not currently provide its own tax credit, the federal ITC can still help offset the costs of going solar for Florida homeowners. But the lack of a state tax credit reduces the financial incentives compared to other leading solar states.