Guide to the Federal Solar Tax Credit in 2024
The federal solar tax credit—also known as the investment tax credit or ITC—is the best incentive available for residential solar panels. If you’re planning to install home solar panels in 2024, you don’t want to miss out on this chance to save on solar panels.
Taylor Energy is the leading residential solar installer in Sonoma County. We’re here to help you learn everything you need to know about the federal solar tax credit so you can utilize it to reduce the cost of your solar panel installation.
What Is the Federal Solar Tax Credit?
The solar tax credit is a dollar-for-dollar credit that can be claimed when you file your federal income taxes for the year you install your solar panel system. It will reduce what you owe by a percentage of your solar panel installation costs. There is no limit to the solar tax credit and if it’s worth more than you owe, you can roll the remainder over to the following year.
How Much Is the Solar Tax Credit Worth in 2024?
Residential and commercial solar energy systems are eligible for a 30% federal tax credit in 2024! In August of 2022, the United States passed the Inflation Reduction Act, which raised the solar tax credit from 26% to 30% and extended it for 10 years. The 30% tax credit will be available until 2032. After that, it will be reduced annually before it is phased out altogether. Install solar now to lock in the highest tax credit amount!
How the Solar Tax Credit Works
The solar tax credit reduces your federal income taxes by 30% of your solar installation costs. For example, if you install a $30,000 solar energy system, you will receive a tax credit worth 30% of $30,000, which is $9,000. Let’s say you owe $10,000 when you file your tax return. You will apply your credit and the amount you owe will come down to just $1,000.
Eligibility Requirements for the Federal Solar Tax Credit
There are a few requirements that must be met to qualify for the federal tax credit for solar panels. Almost all residential solar installations meet these requirements. When you go solar with Taylor Energy, we will ensure your project complies with all tax credit requirements so you can reap the benefits.
To claim the solar tax credit, you must:
Own your solar energy system (leases and power purchase agreements do not qualify)
Install your solar system at your primary or secondary residence in the United States
Install equipment that is new or being used for the first time (used equipment does not qualify)
Have federal income tax liability
To be eligible for the solar tax credit in a given year, you must complete your installation and turn your solar panel system on before the end of that year. To claim the tax credit on your 2024 taxes, for example, your system must be up and running by December 31, 2024.
What Equipment Is Covered by the Solar Tax Credit?
The solar tax credit can be claimed on almost all costs associated with a solar panel installation, including materials, labor, permitting, and inspection costs. The following system types qualify for the ITC solar tax credit:
Rooftop solar panels
Ground-mounted solar panels
Commercial solar panels
Electric Panel Upgrades
Claiming the Federal Solar Tax Credit in 2024
Claiming the solar tax credit is a straightforward process. All you have to do is fill out one additional form when you file your federal tax return for the year you install your solar power system.
Step one: Save all recipes associated with your solar installation
Step two: Complete IRS Form 5695
Step three: Add your renewable energy credit information to your typical IRS Form 1040
Step four: Receive your credit when your tax return is approved
Find Out How Much You Can Save with Solar
Solar is the future of energy and now is the best time to invest in a solar power system for your home! Federal solar incentives are the highest they have ever been and can save you a significant amount of money on your upfront cost. The more you save on your installation, the sooner you will break even and start making money on your investment.
Save 30% on solar with the federal solar tax credit! Call (707) 494-6008 or contact us to get started.
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