Federal Solar Tax Credit (30%)
If you’re considering solar, the federal solar tax credit is one of the biggest incentives available. This guide breaks down what it is, how much you can save, and how to claim it.
🔹 What Is the Federal Solar Tax Credit?
The Federal Solar Investment Tax Credit (ITC) is a 30% tax credit for homeowners who install a solar energy system.
- It’s not a rebate (you don’t get a check back). Instead, it directly reduces how much you owe in taxes.
- If you don’t owe enough taxes in one year, the remaining credit carries forward to future years.
- Applies to both cash purchases and solar loans (but not leases or PPAs).
🔹 How Much Can You Save?
The tax credit is 30% of your total solar installation cost.
✅ Example Savings Calculation:
- Total solar system cost: $20,000
- 30% tax credit: $6,000
- Final net cost after credit: $14,000
🔹 How Long Can You Carry Forward Unused Credit?
If your tax credit is larger than what you owe, the **remaining amount rolls over indefinitely** until fully used.
- ✅ For most people, this means you’ll eventually get the full 30% back—even if it takes multiple years.
- ✅ As long as you have taxable income, you can keep applying the credit until it’s used up.
- 🚫 The only exception is if you have zero taxable income (e.g., retirees with no passive income or capital gains).