How Many Years Can I Claim a Solar Tax Credit?
When you install a solar panel system anywhere in the United States, you can take advantage of the Federal Investment Tax Credit, also called the Solar Tax credit which allows you to deduct 30% of the cost of your solar installation from your federal taxes.
This credit offsets the cost of installing residential solar, but how many years can you claim this credit? Our team at Solar Bear Orlando outlines what you need to know!
How Does the Solar Tax Credit Work?
You can claim the federal solar tax credit for money that you paid toward your solar installation. It helps reduce the amount that you owe when you file your yearly federal tax return.
The Solar Investment Tax Credit can be filed once for the tax year in which you installed your system. The credit is calculated dollar-by-dollar as a reduction of your federal tax liability. So if you have 1,500 credits, you will owe $1,500 less in taxes and so on.
Take note: This solar tax credit is different from a tax refund. To claim the solar tax credit, you must owe taxes to the government. The tax credit essentially negates some or all of the amount you owe. If you have already had those taxes deducted from your paycheck to cover what you owe, you can get the money back in the form of a refund.
Solar Tax Credit Eligibility Requirements
The Solar Tax Credit is only available for property owners whose solar installations meet the specified requirements in the United States. Some of the mandatory conditions that your system needs to satisfy to be eligible include:
- The system should be brand new and should have been installed no earlier than January 1st, 2017, and no later than December 31st, 2034. The Solar Tax Credit will expire in 2035 unless Congress renews it again.
- The system must be owned by you and cannot be leased.
- The property must be in the United States
- For residential solar installations, the location of the system must be at your primary or secondary residence, but it can be a community solar project.
The Value of the Solar Tax Credit
As of 2023, the Solar Tax Credit is 30% for systems installed in 2022-2032.
In 2015, Congress voted to phase out the tax credit, and beginning in 2020, the tax credit was reduced from 30% to 26%. The rate was scheduled to drop from 26% to 22% in 2021. But thankfully, the tax credit was extended until 2034 by congress in 2022.
It will decrease to 26% for PV solar systems installed in 2033 and down to 22% for solar systems installed in 2034. The tax credit will expire in 2035 unless it is renewed by Congress again.
Can You Claim the Solar Tax Credit for Multiple Years?
You can only claim the Solar Tax Credit for your solar panel installation once. However, you can roll over any leftover tax credit balance from the tax credit to the following year or up to five years. But if you own more than one home, you may be able to claim separate tax credits in separate years for solar installations on those homes.
We are happy to answer these questions, but we aren’t tax professionals, so we recommend speaking with a CPA or other tax professional about any specific solar tax credit questions, since every situation is unique.
Read More > Florida Solar Tax Credit FAQs
Solar Bear Orlando
If you are ready to take advantage of the Solar Tax Credit in 2023, call our team at Solar Bear Orlando for expert solar installations throughout Central Florida and the Greater Orlando area. We’ll help you take advantage of all the savings that our ample sunshine can offer!
Get started today! Call Solar Bear for an PV solar installation quote in Central Florida; (727) 471-7442!