Tax Credit

Find out how to save on your federal taxes with a solar tax credit

Homeowners can save on the cost of solar installation by taking advantage of a 30% Investment Tax Credit (ITC) for solar energy. 

Congress recently extended this tax credit, which allows a dollar-for-dollar reduction — equaling 30% of the costs of the system — in your federal income taxes. For example, a solar system that cost $20,000 may qualify for a $6,000 tax credit.

Latest Information About the Solar Investment Tax Credit

In 2022, Congress passed the Inflation Reduction Act (IRA), which offers a major incentive for new solar customers. The bill gives the solar Investment Tax Credit (ITC) a ten-year extension at 30%, making solar power more accessible for households throughout the country. 

The IRA marks the largest investment in climate action in US history by allocating approximately $370 billion for greenhouse gas emission reduction efforts over the next ten years and seeks to scale up the production of renewable energy.

The following is a breakdown of the available tax credit over time:

  • 30% for residential systems placed in service through 2032

  • 26% for residential systems placed in service in 2033

  • 22% for residential systems placed in service in 2034

  • 0% for residential systems placed in service in 2024 and beyond

Additional information:

  • A taxpayer may claim a credit of 30% of qualified expenditures for a system that serves a dwelling unit located in the United States that is owned and used as a residence by the taxpayer. The home served by the system does not have to be the taxpayer’s principal residence.

  • Expenditures include labor costs for on-site preparation, assembly or original system installation, and for piping or wiring to interconnect a system to the home.

  • If the federal tax credit exceeds tax liability, the excess amount may be carried forward to the succeeding taxable year.