Is Solar Power Tax Deductible

5 minutes last updated on august 27 2020.

Is solar power tax deductible.

To claim the credit you must file irs form 5695 as part of your tax return. 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. The federal solar tax credit also known as the investment tax credit itc allows you to deduct 26 percent of the cost of installing a solar energy system from your federal taxes. If you re considering solar you ve probably heard about the federal solar tax credit also known as the investment tax credit itc the federal itc makes solar more affordable for homeowners and businesses by granting a dollar for dollar tax deduction equal to 26 of the total cost of a solar energy system.

Filing requirements for solar credits. The tax break reduces. An average sized residential solar system about 400 square feet of solar panels costs 18 000 according to the solar energy industries association an industry group. If you install solar panels before the end of 2020 you will receive a tax credit that is equal to 26 percent of the cost of your solar installation.

The itc applies to both residential and commercial systems and there is no cap on its value. The federal solar tax credit also known as the solar investment tax credit or itc is the single most important solar incentive available in the united states.