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Whether you’re a homeowner, business, or nonprofit, electricity costs can make up a large portion of your monthly expenses. With a solar system, you’ll generate free power for your system’s entire 30+ year lifecycle. It’s smart for your bottom line and it’s smart for the planet.
Solar is one of the best ways to invest, with returns on investment (ROI) rivaling those of more traditional investments like stocks and bonds. Thanks to substantial electricity bill savings and the 30% solar tax credit, the average homeowner pays off their solar panel system in 4-6 years and sees an average ROI of 3-400% over the life of the system!
What is the federal
solar tax credit?
The federal residential solar energy credit is a tax credit that can be claimed on federal income taxes for a percentage of the cost of a solar PV system paid for by the taxpayer. (Other types of renewable energy are also eligible for similar credits but are beyond the scope of this guidance.)
The installation of the system must be complete during the tax year.
Solar PV systems installed in 2020 and 2021 are eligible for a 26% tax credit. In August 2022, Congress passed an extension of the ITC, raising it to
30% for the installation of which was between 2022-2032. (Systems installed on or before December 31, 2019 were also eligible for a 30% tax credit.) It will decrease to 26% for systems installed in 2033 and to 22% for systems installed in 2034. The tax credit expires starting in 2035 unless Congress renews it.
There is no maximum amount that can be claimed.
Energy.gov United States Office of Energy Efficiency & Renewable Energy