If you’re thinking about installing solar panels for your home, you don’t want to miss out on the solar tax credit. The solar tax credit, also known as the solar investment tax credit (ITC), is a federal solar incentive that will save you 30% on your solar panel installation costs.
Solar Energy Solutions can help you maximize your solar tax benefits with the federal solar tax credit. We’re a highly experienced family-owned solar company and we’ve helped thousands of homeowners take advantage of the tax credit for their solar panel installations.
What Is the Federal Solar Tax Credit?
A tax credit is a reduction in the amount you would otherwise owe when filing your federal income taxes. If you had a $600 tax credit, and you owed $1,000 in taxes, you could apply your credit and reduce what you owe to $400.
The solar tax credit is a type of tax credit for homeowners and businesses that install solar energy systems. It’s worth 30% of your total solar installation costs, with no maximum. If you installed a $30,000 solar energy system, for example, you would receive a tax credit worth $9,000. If the credit is worth more than what you owe, you can roll the remaining amount over to the following year.
Who Can Claim the Solar Tax Credit?
Homeowners must meet the following criteria to qualify for the residential solar tax credit:
- Your solar panels are installed at a home you own in the United States
- You own your solar panels directly (either purchased with cash or financed with a solar loan)
- Your solar equipment is new and being used for the first time
- You have taxable income
To claim the solar tax credit in a given year, you must complete your installation and turn your system on before the end of that year. So, if you want to claim the solar tax credit on your 2023 taxes, your solar panels must be installed and turned on by December 31, 2023.
Commercial solar projects are also eligible for a 30% federal tax credit for solar panel installation, but the requirements are slightly different. Learn more about commercial solar incentives.
What Expenses are Eligible for the Solar Tax Credit?
The solar tax credit is calculated based on your total solar project costs, including the cost of:
- Solar panels
- Solar battery systems (with a capacity rating of 3 kWh or greater)
- Inverters, mounting, and wiring equipment
- Labor
- Permitting and inspection
How Do You Claim the Solar Tax Credit?
It’s easy to claim the solar tax credit for your solar system installation. You don’t need to apply for the credit—you simply need to fill out an additional form when filing your taxes. To make sure you have all the documentation needed, make sure you keep all receipts associated with your solar panel installation. When it’s time to file, fill out IRS Form 5695 and add your renewable energy credit information to your typical Form 1040. That’s it!
Disclaimer: This material has been prepared for informational purposes only. We are not responsible for your specific tax situation and always recommend consulting a tax professional before making financial decisions.
