Solar Tax Credit Information
If you are a U.S. taxpayer interested in installing a solar system in your primary home, the federal solar tax credit might save you another 30 percent on the current solar system cost. And If you’ve already installed a system in 2022, you should consult your tax advisor to determine if you are now eligible for an increased credit rate. The following discussion is also subject to the disclaimer below. You should read the disclaimer carefully.
Our guide below may help show if you potentially can save money for your solar system through the federal solar tax credit.
What is the Federal Solar Tax Credit?
The federal solar tax credit applies to the cost of solar systems installed by homeowners for their primary residences in the United States. The incentive amount is equivalent to a percentage of the eligible costs. When the Inflation Reduction Act was signed on August 16, 2022, the Investment Tax Credit (ITC) expanded. Those who install a PV system between 2022 and 2032 will receive a 30% tax credit. That will decrease to 26% for systems installed in 2033 and 22% for systems installed in 2034. There is no maximum amount that can be claimed.
What Expenses Are Included When I Apply for My Federal Solar Tax Credit?
The following expenses may be included:
- Standalone batteries with a capacity rating of 3 kilowatt hours (kWh) and more may also be eligible beginning on January 1, 2023. You should consult your tax advisor to determine if such energy storage devices are eligible in your particular situation.
- Solar PV panels or PV cells used to power an attic fan (but not the fan itself).
- Contractor labor costs for onsite preparation, assembly, or original installation. Eligible costs and fees may also include permitting fees, inspection costs, and developer fees. You should consult your tax advisor to determine which costs and fees are eligible in your particular situation.
- Balance-of-system equipment, including wiring, inverters, and mounting equipment
- Sales taxes on eligible expenses.
Do I Qualify for the Federal Solar Tax Credit?
To learn whether you qualify for claiming the federal solar credit, check the full criteria listed by the U.S. Department of Energy.
- You must own your home (not lease or rent), and you must pay enough taxes to the federal government (tax liability).
- You must own the solar system (not lease or rent), and the system should be an original installation that has not been used before.
- Your solar PV system is eligible if it was installed between January 1, 2006, and December 31, 2023.
- The solar system is located in the United States, at your primary or secondary residence. Off-grid residence applies if it is generating electricity for use at your residence.
What are the filing requirements for the solar tax credit?
To claim the credit for residential systems, you must file IRS Form 5695 to report your expenses.
To claim the credit for commercial systems, you must file IRS Form 3468 to report your expenses.
If the federal tax credit exceeds tax liability, the excess amount may be carried forward to the succeeding taxable year. The excess credit may be carried forward until 2021, but it is unclear whether the unused tax credit can be carried forward after then.
Note: RV's have been accepted by the IRS as a second home for tax purposes when criteria are met. This may make your RV’s install eligible for this tax credit.
Please Note: Delta Power Stations are not qualified to provide you with tax advice. As always, we recommend that you consult with your Tax adviser or CPA to make sure this program applies to you and your situation.
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