Federal Tax Credit for Going Solar

Are you looking for an incentive to install solar panels, live more sustainably, and lower utility costs? The Solar Investment Tax Credit (ITC) is a federally funded tax credit for residential and commercial property owners who install solar power systems. This tax credit can be claimed on federal income taxes for a percentage of the cost of going solar. The purpose of this credit is to incentivize integration of more solar energy into the grid, enhance the use and storage of solar energy, and ultimately increase the use and production of renewable energy in the US. The ITC applies to battery storage investments as well now, only if they are installed as paired with Solar assets (not as standalone assets).

A tax credit is the reduction in the income tax you would normally owe. This special ITC tax break for having solar panels and energy storage can be up to 26% (See Figure 1). However, unless congress approves another extension, it will only decrease, so the time to act is now.

• The credit can only be claimed on the “original installation” of the solar equipment and associated energy storage.
• The ITC decreased to 26% for systems installed after 2020 and will further lower to 22% for systems installed in 2023.

With the recent promising plans of transitioning to renewable energy sources around the globe, this incentive might not be around for many