As we move towards a greener future, the role of solar energy continues to grow in parallel.
It’s a great way to offset some of the costs you incur while setting up your system.
Can solar panels save you money?
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What is the federal solar tax credit?
The residential clean energy credit itself isn’t totally new.
The solar credit is just one of thetax credit and rebate programs in the Inflation Reduction Act.
The legislation’s incentives can also save you money onelectric vehicles,EV chargersandenergy efficiency upgradesto your home.
The solar tax credit was quite popular in 2023, the first year withdata from the IRS.
More than 752,000 American taxpayers claimed the credit for solar systems, with an average credit of $27,355.
Another 139,130 taxpayers claimed the credit for asolar water heater, and 48,840 claimed it forhome batteries.
How does the federal solar tax credit work?
This federal incentive, while generous, won’t come directly in the form of cash in your pocket.
Instead, it’ll reduce the amount of money you pay in federal taxes.
That means your tax bill in the following year would be lowered by $4,500.
What is covered by the solar tax credit?
The residential clean energy creditcovers a broad arrayof home energy improvements.
Other roofing costs, like new support beams or shingles, aren’t covered by the solar tax credit.
How do I claim the federal solar tax credit?
The process for claiming the federal tax credit is fairly straightforward.
“These software packages make things easy for consumers,” Michaud said.
What about state tax credits?
This guide outlinessome of the most generous state incentive programs, including those inIllinois,New YorkandSouth Carolina.
Some states offerproperty tax and sales tax exemptionsfor solar panels too.
Solar resources in your state
How accessible are residential solar panels today?
“These residential solar energy systems are now more affordable than ever,” Michaud said.
On top of the cost savings, installers aremore plentiful and experiencedtoo.
Solar tax credit FAQs
When can I claim the federal solar tax credit?
Any solar energy system installed after Jan. 1, 2006, is eligible for the one-time credit.
What are the criteria to claim the solar energy credit?
you’re able to claim the credit once toward the original installation of the equipment.
You must own the solar photovoltaic system, and it must be located at your primary or secondary residence.
(In some cases, an offsite community solar project also qualifies.)
If you are leasing solar panels, you don’t get the tax break.
There is no maximum amount that can be claimed.
How many times can I claim the solar tax credit?
There is no annual or lifetime limit to the residential clean energy credit, except for fuel cells.
Is there an income limit for the federal solar tax credit?
Can I claim the federal solar tax credit if I do not owe any taxes?
Because the credit is nonrefundable, it is limited to the amount of taxes you owe that year.
Unused credits can be rolled over to future years.
CNET’s Dan Avery contributed to this report.
