dodecahedron wrote:unclescrooge wrote:
Of course, the state tax refund will be taxed next year but luckily household income will be lower due to wife not working for 2 months for maternity leave, and I'll get a huge deduction for installing solar.
Basically, my refund is paying for a new roof + solar panels. And these are providing a large deduction next year.
Small but important technical point: what you get for solar is NOT a tax deduction, it is a tax credit.
A tax credit is generally much more valuable than a tax deduction. A tax deduction of $X reduces your taxable income by $X and reduces your tax liability by some (less than 100%) percentage of $X. A tax credit of $X reduces your tax liability by $X. (Even better, the solar tax credit can be carried forward if you do not have enough tax liability to use it all in one year. By contrast, most tax deductions can't be carried forward if they can't be used in the current year. There are some noteworthy exceptions to this last rule, e.g., excess charitable deductions can be carried forward.)
Ah yes! Even better!