Federal Solar Tax Credits

The solar tax credit allows you to claim a credit of 30% of the cost of installing a solar energy system located in the United States. 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. This applies to both residential and commercial system.

Who is eligible for the federal Investment Tax Credit?

  • Existing homes and new construction qualify. If the installation is at a new home, the “placed in service” date is the date of occupancy by the homeowner.
  • Both principal residences and second homes qualify.
  • Rentals do not qualify.
  • If the federal tax credit exceeds tax liability, the excess amount may be carried forward to the succeeding taxable year.

The Congress passed a spending bill in late December 2015. Here are the details of the maximum allowable tax credit.

  • 2016 – 2019: deduct30 percent of the cost of the system.
  • 2020: deduct 26 percent of the cost of the system.
  • 2021: deduct 22 percent of the cost of the system.
  • 2022 onwards: deduct 10 percent of the cost of the system.

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