Don’t Wait to Take Advantage of the Federal Solar Tax Credit
If you’re considering switching to solar energy, there’s no better time than now to act. The federal solar tax credit, also known as the Investment Tax Credit (ITC), is a significant financial incentive that allows homeowners to deduct a percentage of their solar installation costs from their federal taxes.
What Is the Solar Tax Credit?
The solar tax credit allows homeowners to deduct a percentage of their solar energy system’s cost from their federal taxes. This credit applies to both solar panel systems and battery storage and installation costs, making renewable energy more affordable and accessible.
The Credit Won’t Last Forever
For 2025, the tax credit remains at 30%. Currently, by 2033, the credit is set to drop to 26%, and in 2034, it will be reduced to 22%. Acting now ensures you get the full 30% benefit before the scheduled reductions begin.
Beat Rising Energy Costs
Now is the best time to get the most financial benefits from solar. Utility rates continue to rise and demand for solar is increasing. Supply chain fluctuations, inflation, and market fluctuations will impact the cost of solar. Homeowners who delay their solar installation today will pay more tomorrow.
Frequently asked questions
Disclaimer: We cannot give tax advice. Everyone’s tax situation is different. We suggest that you keep all receipts and documentation from your solar installation and seek the advice of your tax advisor, attorney, and/or financial planner to determine your personal tax circumstances.
A tax credit is a dollar-for-dollar reduction in the amount of income tax you would otherwise owe. For example, claiming a $1,000 federal tax credit reduces your federal income taxes due by $1,000.
To be eligible for the solar tax credit, you must:
- Own the solar energy system (leases do not qualify).
- Install the system at your primary or secondary residence in the U.S.
- Have enough tax liability to benefit from the credit (it is a non-refundable credit, meaning it only offsets owed taxes).
Thanks to the Inflation Reduction Act (IRA) passed in 2022, extending and enhancing the Investment Tax Credit (ITC) as we know it as the Federal Solar Tax Credit. Homeowners who install solar panels between 2022 and 2032 can claim a 30% tax credit on their system’s total cost. The credit will decrease to 26% in 2033 and then to 22% in 2034 before expiring in 2035 unless further extended by Congress.
This credit applies to both solar panel systems and battery storage and installation costs, making renewable energy more affordable and accessible.
There’s no upper limit to how much homeowners can claim, making it a significant incentive for those investing in large systems.
Beyond the federal tax credit, many states, utilities, and local governments offer additional solar incentives, rebates, and net metering programs that can further reduce costs. You can find more information about these programs here.