Yes! If...

Your solar PV system was installed between January 1, 2017, and December 31, 2034.

The solar PV system is located at a residence of yours in the United States. Either: You own the solar PV system (i.e., you purchased it with cash or through financing, but you are neither leasing the system nor paying a solar company to purchase the electricity generated by the system).

Or, you purchased an interest in an off-site community solar project, if the electricity generated is credited against, and does not exceed, your home’s electricity consumption. Notes: the IRS issued a statement (see link above) allowing a particular taxpayer to claim a tax credit for purchasing an interest in an off-site community solar project.

However, this document, known as a private letter ruling or PLR, may not be relied on as precedent by other taxpayers. Also, you would not qualify if you only purchase the electricity from a community solar project. The solar PV system is new or being used for the first time. The credit can only be claimed on the “original installation” of the solar equipment.

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Solar PV panels or PV cells (including those used to power an attic fan, but not the fan itself)

Contractor labor costs for onsite preparation, assembly, or original installation, including permitting fees, inspection costs, and developer fees

Balance-of-system equipment, including wiring, inverters, and mounting equipment

Energy storage devices that have a capacity rating of 3 kilowatt-hours (kWh) or greater (for systems installed after December 31, 2022).

If the storage is installed in a subsequent tax year to when the solar energy system is installed it is still eligible, however, the energy storage devices are still subject to the installation date requirements). 

State tax credits for installing solar PV generally do not reduce federal tax credits—and vice versa.

When you receive a state tax credit, the taxable income you report on your federal taxes may be higher than it otherwise would have been because you now have less state income tax to deduct. (The Tax Cuts and Jobs Act of 2017 placed a $10,000 limit on state and local tax (SALT) deduction through 2025.

Therefore, if a homeowner is still paying more than $10,000 in SALT after claiming a state tax credit, the state tax credit benefit would not effectively be reduced by the federal tax rate, as it would not impact federal taxes (due to the SALT limit).) 

The end result of claiming a state tax credit is that the amount of the state tax credit is effectively taxed at the federal tax level.

If I'm off-grid?

Yes. A solar PV system does not necessarily have to be connected to the electric grid for you to claim the residential federal solar tax credit, as long as it is generating electricity for use at your residence.

The solar PV panels are on my property, but not on my roof?

Yes. The solar PV panels located on your property do not necessarily have to be installed on your roof, as long as they generate electricity for use at your residence.

I have a home office (or my residence is also used for a commercial purpose)?

Yes, but if the residence where you install a solar PV system serves multiple purposes (e.g., you have a home office or your business is located in the same building), claiming the tax credit can be more complicated. When the amount spent on the solar PV system is predominantly used for residential rather than business purposes, the residential credit may be claimed in full without added complications. However, if less than 80% of the solar PV system cost is a residential expense, only the percentage that is residential spending can be used to calculate the federal solar tax credit for the individual’s tax return; the portion that is a business expense could be eligible for a similar commercial ITC on the business’s tax return.

I financed my solar PV system instead of paying for it upfront?

Yes. If you financed the system through the seller of the system and you are contractually obligated to pay the full cost of the system, you can claim the federal solar tax credit based on the full cost of the system. Miscellaneous expenses, including interest owed on financing, origination fees, and extended warranty expenses are not eligible expenses when calculating your tax credit.

I bought solar panels but have not installed them yet?

No. The tax credit is only for systems for which installation was complete during the year.

No, there is neither a dollar limit nor is there a lifetime limit on the tax credit. The credit is only limited to 30% of qualified expenditures made for property placed in service in a given year.

Sometimes. Traditional roof materials and structural components that serve only a roofing or structural function do not qualify for the credit. However, some solar roofing tiles and solar roofing shingles serve both the functions of solar electric generation and structural support and such items may qualify for the credit

Yes. The tax credit can be used against either the federal income tax or the alternative minimum tax.

There are two tax credits available for businesses and other entities like nonprofits and local and tribal governments that purchase solar energy systems (see the Homeowner’s Guide to the Federal Tax Credit for Solar Photovoltaics for information for individuals):

The investment tax credit (ITC) is a tax credit that reduces the federal income tax liability for a percentage of the cost of a solar system that is installed during the tax year.

The production tax credit (PTC) is a per kilowatt-hour (kWh) tax credit for electricity generated by solar and other qualifying technologies for the first 10 years of a system’s operation. It reduces the federal income tax liability and is adjusted annually for inflation.

Generally, project owners cannot claim both the ITC and the PTC for the same property, although they could claim different credits for co-located systems, like solar and storage, depending on what further guidance is issued by the Internal Revenue Service (IRS). 

Other types of renewable energy and storage technologies are also eligible for the ITC but are beyond the scope of this webpage.

Solar systems that are placed in service in 2022 or later and begin construction before 2033 are eligible for a 30% ITC or a 2.75 ¢/kWh[3] PTC if they meet labor requirements issued by the Treasury Department[4] or are under 1 megawatt (MW)[5] in size.

What projects are eligible for the ITC or PTC?

To be eligible for the business ITC or PTC, the solar system must be located in the United States or U.S. territories

Use new and limited previously used equipment

Not leased to a tax-exempt entity (e.g., a school), though tax exempt entities are eligible to receive the ITC themselves in the form of a direct payment.

Did a salesperson knock on your door and promise free rooftop solar panels at no cost to you? Or say you’ll never have to pay another electricity bill because government programs, grants, or rebates cover your solar installation? It’s likely a scam.

While there are some government-funded solar programs for households that qualify, “going solar” isn’t free. Honest businesses will tell you exactly how much it’ll cost to get and install solar panels.

Here’s how to steer clear of the scams:

Do some research. Avoid solar companies that say a government program will cover the whole cost of solar panels — or say they’re from (or affiliated with) the government. These are lies. If you’re looking at solar energy for your home, get quotes from reputable providers with a valid license.

Then compare them. Check out the Department of Energy’s guide for homeowners and commonly asked questions to learn more.Don’t pay advance fees. Steer clear of anyone promising big savings and demanding large upfront payments or deposits. To get you to pay, scammers promise you big savings if you act fast — but they’ll vanish with no intention of ever doing or finishing the work. Legitimate providers will work with you to figure out whether solar energy is right for you. Check out the Department of Treasury’s guidance on clean energy.

Take your time.

If someone is rushing you to sign a contract, or insists you sign an agreement on an electronic tablet without showing you the full agreement, stop. That’s something scammers do. Take the time to read and understand the agreement with the provider. Pay attention to warranties, cancellation policies, payment schedules, and try to spot any hidden fees.

Honest businesses will give you time to go over the terms of the contract, understand the agreement, and let you sign it in writing.

We cannot speculate, however NOW is a great time to take advantage of all the tax credits and incentives while they do exist!

The U.S. Department of Energy defines community solar as any solar project or purchasing program, within a geographic area, in which the benefits flow to multiple customers such as individuals, businesses, nonprofits, and other groups. In most cases, customers benefit from energy generated by solar panels at an off-site array.

Community solar customers typically subscribe to—or in some cases own—a portion of the energy generated by a solar array, and receive an electric bill credit for electricity generated by their share of the community solar system. Community solar can be a great option for people who are unable to install solar panels on their roofs because they are renters, can’t afford solar, or because their roofs or electrical systems aren’t suited to solar. Community solar is rapidly growing across the country.

The National Renewable Energy Laboratory tracks installation data on community solar.

How Does Community Solar Work?

Community solar projects generate electricity from sunlight and the electricity flows through a meter to the utility grid.

Community solar subscribers (i.e., households, businesses, or any other electricity customer) pay for a share of the electricity generated by the community solar project. This is typically in the form of a monthly subscription fee. 

The local utility pays the community solar provider for the energy generated, and each subscriber receives a portion of the dollar value generated by their community solar subscription as a credit. Typically, this credit is applied directly to a subscriber’s monthly electric bill, helping to reduce customers’ electricity costs.

Net metering is a billing mechanism that credits solar energy system owners for the electricity they add to the grid.

For example, if a residential customer has a PV system on their roof, it may generate more electricity than the home uses during daylight hours. If the home is net-metered, the electricity meter will run backward to provide a credit against what electricity is consumed at night or other periods when the home’s electricity use exceeds the system’s output.

Customers are only billed for their “net” energy use. On average, only 20-40% of a solar energy system’s output ever goes into the grid, and this exported solar electricity serves nearby customers’ loads.

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