As global tensions drive up oil prices and increase uncertainty around energy markets, many Florida citizens are revisiting the value of energy independence, and for homeowners, solar power is front and center in that conversation. But one of the most important financial incentives for going solar—the federal solar tax credit—is set to phase out soon, potentially costing households thousands of dollars if they don’t act in time.
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What is the Federal Solar Tax Credit?
The federal solar investment tax credit (ITC), first enacted in 2005 and extended multiple times since, allows homeowners to deduct a portion of the cost of installing solar panels from their federal taxes. Currently, that credit covers 30 percent of the total system cost, including equipment and installation.
For example, if a solar system costs $20,000, the current tax credit would allow the homeowner to deduct $6,000 from their federal tax liability.
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This incentive was designed to promote the adoption of clean, renewable energy by reducing the up-front cost for consumers. It has played a major role in the growth of residential solar systems nationwide, including here in Florida.
What’s Changing and When?
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The Inflation Reduction Act of 2022 temporarily restored the solar tax credit to 30 percent through 2032. However, subsequent budget negotiations and federal energy policy changes have put the long-term stability of this credit in question. If Congress does not extend or revise the program again, the credit is scheduled to begin phasing out after 2025, just a few short months away.
After 2025, the credit would drop to 26 percent in 2026, 22 percent in 2027, and then disappear entirely for residential systems starting in 2028.
For homeowners, this means that systems installed after the end of this year may no longer qualify for the full 30 percent benefit. And with potential delays in permitting and installation timelines, waiting until the last minute could mean missing the window altogether.
Rising Fuel Prices Add Urgency
In recent weeks, oil and fuel prices have spiked in response to mounting instability in the Middle East and increasing global tensions. Some experts warn that energy prices could remain volatile for the foreseeable future, especially as hurricane season ramps up and geopolitical pressures intensify.
These factors have led to a surge in interest from homeowners looking to lock in long-term savings through solar energy before the cost of electricity rises further—and before federal incentives begin to disappear.
A Local Perspective
“We’ve definitely seen an uptick in homeowners asking questions and wanting to move quickly,” said Randy from Affordable Solar Services, a state-licensed, locally owned solar contractor based in Brevard County. “People are realizing that not only is the tax credit going away soon, but the cost of doing nothing is going up.”
Affordable Solar Services, which also provides removal and re-installation services after storm damage, says they are increasingly fielding calls from homeowners who had previously postponed solar installation but are now reconsidering in light of rising utility costs and changing federal incentives.
Next Steps for Homeowners
For those considering solar, time is becoming a critical factor. Systems must be fully installed and operational before the end of the year to qualify for the 30 percent credit under current federal guidelines. That means getting estimates, securing financing if needed, and initiating installation well before the December deadline.
Experts recommend working with licensed, insured contractors who are familiar with the permitting process and can help homeowners ensure their system is eligible under IRS guidelines.
Affordable Solar Services is one such company locally offering free consultations to walk homeowners through the process, from financing and design to installation and tax filing requirements.
“The biggest thing we tell people is not to wait until the last minute,” the company said. “Even if you’re just exploring your options, now is the time to ask questions.”
