As of this publish date, yes, the Iowa Solar Tax Credit is still available for 2016. In fact, there is a current push by lawmakers to boost funding for the popular solar tax credit here in Iowa. What you won’t hear though is how fast the pool of money for the Iowa tax credit is quickly evaporating due to so much solar being installed across the state.
How does the Iowa Solar Tax Credit work?
Very similar to federal solar ITC (investment tax credit) but claimed via a different route. After your system is installed you file an online application with the Iowa Department of Revenue’s tax credit claiming system to redeem your credit, which you can then use when filing your regular taxes. As of January 2016 residential customers can claim a credit worth 50% of what their federal solar credit is worth (not to exceed $5,000), and commercial customers can claim a state credit of 50% of the federal credit but not to exceed $20,000. While not technically a rebate, the Iowa Solar Tax Credit, along with the federal ITC, help solar customers reduce their overall tax liability.
That said, the state and federal governments consider each other’s tax credit as income and will be taxed accordingly. While our solar proposals are investment-grade with thorough financial projections and a 25 year cash flow analysis, we always encourage every customer to run our proposal by their own tax accountant so they can fit our numbers into their specific tax situations.
Will the Iowa Solar Tax Credit run out this year?
Short answer: Likely yes, just as it has in previous years.
Long answer: The state of Iowa originally set aside a 1.5 million dollar yearly pool back in 2012 that solar customers could pull from to claim their Iowa solar tax credit. Each year since, that pool has been completely used up and subsequently expanded little by little. In fact the growth of solar in Iowa has far exceeded projections from the Iowa Department of Revenue. Now the pool is currently up to 5 million, with talks to expand it even more as noted above.
If the cap is hit this year, customers who started their installation too late in the year may not be awarded the Iowa solar tax credit. With solar growing exponentially here in Iowa, we’d highly recommend getting your solar installation rolling now. Sometimes the process can take a few months to get approval by your utility company and be operational. Don’t risk missing out on the Iowa solar tax credit. Drop us a line to get started with a no-hassle chat.