As you prepare your taxes, we want to ensure that you’re aware of the Federal Investment Tax Credit (ITC) that may be available to you.
What Is the Federal Solar Tax Credit?
The ITC allows you to claim 30% of your system cost as a dollar-for-dollar credit on your federal tax bill. Unlike a rebate or deduction, this credit directly reduces the amount you owe in taxes. The ITC was extended through 2034 under the Inflation Reduction Act, and there are no income limits to qualify.
Key Considerations:
- You must owe federal taxes to use the credit. If your tax liability isn’t large enough in one year, you can roll over the remaining credit to future years until 2034.
- The tax credit applies in the year your system passes the final electrical inspection.
How to Claim Your Solar Tax Credit
- File IRS Form 5695 (Residential Energy Credit) with your federal tax return.
- Enter the credit amount on Schedule 3 (Form 1040) when filing.
- If you expanded your system, you can claim a credit for the cost of the addition.
For commercial installations, refer to Form 3468 (Investment Credit). If you installed an EV charger, use Form 8911.
We recommend consulting a tax professional for personalized advice. If you or your tax expert have any questions, feel free to reach out.