What Is the Solar Investment Tax Credit?
The federal solar Investment Tax Credit (ITC) is a dollar-for-dollar reduction in the amount of federal income tax you owe. If you install a solar energy system on your home, you can claim 30% of the total system cost as a credit on your federal tax return.
This is not a deduction that reduces your taxable income — it is a credit that directly reduces the taxes you owe. The ITC was extended and expanded by the Inflation Reduction Act of 2022, locking in the 30% rate through the end of 2032.
There is no maximum cap on the credit amount for residential systems, so the larger your system, the more you save. Any unused credit can be rolled forward to future tax years.
Example Calculation
Effective cost after credit: $17,500
ITC Rate Schedule
The tax credit rate decreases over time. Installing before 2033 locks in the maximum 30% benefit.
30%
2022 - 2032
26%
2033
22%
2034
0%
2035+
Who Qualifies?
What Costs Are Covered?
How to Claim Your Credit
Claiming the federal solar tax credit is straightforward. Follow these steps when filing your annual tax return.
Keep your solar installation contract and receipts
Save all documentation from your solar installation including the signed contract, invoices, and proof of payment showing the total system cost.
Complete IRS Form 5695
Download and fill out IRS Form 5695 (Residential Energy Credits). Enter your total solar system cost in Part I and calculate the 30% credit amount.
Transfer the credit to your Form 1040
The calculated credit from Form 5695 is entered on your Form 1040 (Schedule 3, line 5), directly reducing the federal taxes you owe.
File your tax return and receive the credit
File your federal tax return as usual. The credit reduces your tax liability. If your credit exceeds your tax owed, the remaining balance rolls forward to next year.
Tax Credit FAQs
Common questions about the federal solar Investment Tax Credit.