Colorado and the federal government give you a lot of incentives to go solar – not only will you not have to pay any sales tax on your new system, you’ll also get paid by the U.S. government to build a solar system. Plus you gain the added advantage of banking any extra solar energy you generate thanks to Colorado’s net metering mandate. Combined with decreased, or zero energy costs, these incentives make installing a solar system on your home a great investment.
Federal Solar Tax Credit
The federal Investment Tax Credit will reduce the cost of your PV solar energy system by 26%. That is a direct refund to you of 26% of the total cost of your new solar system. However, this credit is set to decrease at the end of 2022, falling from 26% to 22%, so now is the best time to maximize your savings with solar energy. To apply for the Investment Tax Credit, one only has to fill in an additional tax form with the IRS.
Colorado rewards you even more than other states for producing extra solar energy, because the state has no cap on net metering and your solar bank is kept at retail value. This means that any extra solar power you produce will be yours to use at a later date as it is kept in your name in a solar bank account. These unused kilowatt hours (kWh) of electricity are returned to you via credit on your utility bill in low solar production months so you don’t pay cash for grid energy used.
State Tax Exemptions
Thanks to Colorado’s tax exemptions, you won’t have to pay the government anything for your new solar installation. Colorado’s Sales and Use Tax Exemption for Renewable Energy Equipment means you don’t have to pay any sales tax on the purchase of a solar system. The Property Tax Exemption for Residential Renewable Energy Equipment keeps you from having to pay any additional taxes on the increased value of your house after your solar installation. Solar panels are an easy and eco-friendly way to increase the value of your property without having to bear the brunt of increased taxes.
Some utilities have a Rewards program that gives customers an additional $.005 per total kWh of solar energy they produce. This may not be a huge savings but at least it provides compensation for the carbon credits you are generating by making clean energy and adds to your overall savings. You can learn more about Xcel’s Solar Rewards program here.
Decreased Energy Costs
A residential solar system pays for itself in decreased energy costs after only 7-9 years. With electricity getting more expensive each year, building your own clean renewable power-generating system provides the financial advantage of energy independence. And for an average solar system in Denver, the user will see $45,702 in savings from the system over 25 years.