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Solar Tax Credit Informational Guide

What solar systems are eligible for the federal tax credit?

A complete system in place or service after January 1, 2006, and in service on or before December 31, 2021 for:

  • Residences (Existing homes and new construction qualify as well as both principal residences and second homes. Rental homes do not qualify.)
  • Businesses
  • RVs and Boats (when considered as second homes by the IRS)


What is the tax credit for?

The federal tax credit is for solar expenditures (including equipment and installation costs) with no upper limit.

Please note that the federal tax credit will end in 2021, and that the amount of tax credit one can receive decreases over the years.

  • 30% for systems placed in service by 12/31/2019
  • 26% for systems placed in service after 12/31/2019 and before 01/01/2021
  • 22% for systems placed in service after 12/31/2020 and before 01/01/2022


What are the filing requirements for the solar tax credit?

To claim the credit for residential systems, you must file IRS Form 5695 to report your expenses.
To claim the credit for commercial systems, you must file
IRS Form 3468 to report your expenses.

If the federal tax credit exceeds tax liability, the excess amount may be carried forward to the succeeding taxable year. The excess credit may be carried forward until 2021, but it is unclear whether the unused tax credit can be carried forward after then.


**The above information is for educational purposes only and should not be construed as legal advice. Please consult a tax professional for more information.**

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