Solar Tax Credit: What You Need to Know About the Federal Solar Tax Credit
This means that if you purchase and install a solar power system before the end of the year, you may be eligible to receive a rebate, or lower the taxes you pay on your next tax return.
This is a huge incentive which makes our solar kits even more affordable, and this solar tax credit guide will help you understand how to take advantage of it!
What is the Federal Solar Tax Credit
The Solar Tax Credit offers homeowners and commercial property owners a financial incentive to install solar power systems, thus adopting renewable energy.
The ITC was extended in December 2020 as part of the federal government’s COVID-19 relief package, and was further extended in 2022 as part of the Inflation Reduction Act.
The ITC was extended in December 2020 as part of the federal government’s COVID-19 relief package, and was further extended in 2022 as part of the Inflation Reduction Act.
How does the Solar Tax Credit Work? How much can I save?
The solar tax credit allows you to claim 30% of the total cost of your solar system as a credit on your federal tax return.
This means that if you purchase and install a solar kit from us this year, you’ll be eligible to receive a 30% tax credit.
So if you were to buy a $20,000 solar kit this year, you’ll owe $6,000 less when you file your annual tax for the corresponding year.
This means that if you purchase and install a solar kit from us this year, you’ll be eligible to receive a 30% tax credit.
So if you were to buy a $20,000 solar kit this year, you’ll owe $6,000 less when you file your annual tax for the corresponding year.
How do I know if I qualify for the solar tax credit?
To qualify for the solar tax credit, you must:
• Purchase and install a solar panel system or solar panels
• Own your home or commercial property
Note - your home does not need to be your primary residence, you just have to own it.
The solar tax credit applies to:
• Any complete solar kit for your home or business
• Product purchase that expand your solar power system and include at least one solar panel (batteries, cables, more panels, etc)
• Miscellaneous electrical and building material that is used to install your solar kit (ground mounts, etc)
• Labor or installation costs
• All tools bought or rented
• Permitting fees and service costs
• Purchase and install a solar panel system or solar panels
• Own your home or commercial property
Note - your home does not need to be your primary residence, you just have to own it.
The solar tax credit applies to:
• Any complete solar kit for your home or business
• Product purchase that expand your solar power system and include at least one solar panel (batteries, cables, more panels, etc)
• Miscellaneous electrical and building material that is used to install your solar kit (ground mounts, etc)
• Labor or installation costs
• All tools bought or rented
• Permitting fees and service costs
What if I financed my system and did NOT buy it in full up front?
You can still claim the credit. If you financed the system through the seller of the system and you are contractually obligated to pay the full cost of the system, you can claim the federal solar tax credit based on the full cost of the system. Miscellaneous expenses, including interest owed on financing, origination fees, and extended warranty expenses are not eligible expenses when calculating your tax credit.
How to Qualify for and Claim your 30% Solar Tax Credit
In order to take advantage of the 30% solar tax credit and maximize your savings, we recommend that you:
Save all receipts - keep all receipts related to your solar power system. This includes the purchase of your solar kit / equipment, shipping costs, installation and permitting. We recommend printing out and organizing all receipts, and/or saving them to a digital folder.
For residential solar power systems, use IRS Tax Form 5695 to report your expenses relating to your residential solar project.
For commercial renewable energy systems, use IRS Tax Form 3468 to report your expenses relating to your commercial solar project.
Carryover your tax liability – If the federal tax credit exceeds your tax liability, you may carry over the excess amount the following taxable year.
Disclaimer: While we strive to provide you with accurate information regarding the solar tax credit, we also know that everyone’s individual tax situation is different. Please consult a tax professional to make sure you are eligible to claim your 30% federal solar tax credit.
Save all receipts - keep all receipts related to your solar power system. This includes the purchase of your solar kit / equipment, shipping costs, installation and permitting. We recommend printing out and organizing all receipts, and/or saving them to a digital folder.
For residential solar power systems, use IRS Tax Form 5695 to report your expenses relating to your residential solar project.
For commercial renewable energy systems, use IRS Tax Form 3468 to report your expenses relating to your commercial solar project.
Carryover your tax liability – If the federal tax credit exceeds your tax liability, you may carry over the excess amount the following taxable year.
Disclaimer: While we strive to provide you with accurate information regarding the solar tax credit, we also know that everyone’s individual tax situation is different. Please consult a tax professional to make sure you are eligible to claim your 30% federal solar tax credit.