What is the Solar Tax Credit?
The federal tax credit for solar energy, also known as Tax Credit for Investment (ITC) allows you to deduct 30% of the cost of installing a solar energy system from your federal taxes. The ITC applies to residential and commercial systems and there is no limit to its value. Thanks to ITC, the average solar customer saves more than $ 7,000 in the cost of solar energy. It was originally established by the energy policy law of 2005 and should expire at the end of 2007. Some extensions on its expiration date delayed expiration until the end of 2016. Thanks to the bill of expenses that the congress passed in December 2015, The tax credit will now be available to homeowners until 2021.
2016 – 2019: 30% of the system value.
2020 – 2021: 26% of the system value.
2021 – 2022: 22% of the system value.
as of 2022: 0% of the system value.
How to claim the tax credit?
When you file your annual federal tax return, you claim the solar tax credit through Form 5695.