How Do Tax Credits Work For Solar

The history of the solar investment tax credit.

How do tax credits work for solar.

Homeowners can use the federal tax credit for battery storage installing new systems and more. Thanks to the popularity of the itc and its success in supporting the united states transition to a renewable energy economy congress has extended its expiration date multiple times. A small history of the solar tax credit. Filing requirements for solar credits.

What does the federal solar tax credit extension mean for the solar industry. It s mostly because the solar tax credit has proven to be a highly effective incentive. To claim the credit you must file irs form 5695 as part of your tax return. How does a solar tax credit work.

Every state has its own rules for how solar tax credits work. The itc was originally established by the energy policy act of 2005 and was set to expire at the end of 2007. However due to its vast popularity congress has been extending that expiration date for over a decade now. Alright now on to what the tax credit does.

Originally established by the epa in 2005 the solar tax credit was supposed to last until the end of 2007. If you end up with a bigger credit than you have income tax due a 3 000 credit on a 2 500 tax bill for instance you can t use the credit to get money back from the irs. Renewable energy goals the itc has been extended multiple times. A series of extensions pushed the expiration date back to the end of 2016 but experts believed that an additional five year extension would bring the.

Some give you a set amount based on your system size i e a certain number of dollars per watt of energy generation capacity and some give you a percentage of the total cost. While it was originally set to expire in 2007 the current federal solar tax credit extension is set to expire in 2022.