Quick Summary
The Federal Solar Tax Credit (officially the Residential Clean Energy Credit under Section 25D) allows homeowners to deduct 30% of their total solar and battery installation costs directly from their federal tax liability, with no cap on total project value.
Reauthorized under the Inflation Reduction Act, the 30% credit applies to residential projects completed through 2032. If your tax credit exceeds your federal tax liability for the year, the remaining balance carries over to the next tax year.
What Costs Qualify for the 30% Credit?
- Solar PV modules (panels) and racking hardware.
- Inverters, system wiring, electrical panels, and grid-tie meters.
- Home battery storage banks (like Tesla Powerwall 3).
- Permits, engineering plans, and third-party contractor labor.
Frequently Asked Questions
How do I claim the federal solar tax credit?
You claim the credit by completing IRS Form 5695 and attaching it to your annual Form 1040 tax filing.
Is the tax credit a refund?
No. It is a non-refundable tax credit, meaning it reduces tax liability dollar-for-dollar but will not result in a check if you owe no tax.