Solar Tax Credit: Your Complete Guide to Federal Solar Tax Credit

Have you installed a solar power system, or do you plan to have one installed in the next couple of years? In that case, you’re probably qualifying for the federal solar tax credit.

To make your solar system installation even more worthwhile, we created this solar tax credit guide to help you understand what it is and how to claim it.

What Is the Federal Solar Tax Credit?

The solar investment tax credit (ITC), commonly known as the solar tax credit, offers homeowners and commercial property owners' incentives to install solar and move to renewable energy.

The ITC was extended in December 2020 as part of the federal government COVID-19 relief package and was further extended in 2022 as part of the Inflation Reduction Act.

How Does the Solar Tax Credit Work?

The solar tax credit allows you to claim 30% (or 26% or 22%, depending on the year you install) of the total cost of your solar system as a credit on your federal tax return.

2022–2032 → If you install your solar power system during this time, you'll receive a 30% solar tax credit. Example: If you pay $20,000 for your solar system, you'll owe $6,000 less when you file your taxes the following year.
2033 → Installations qualify for a 26% credit.
2034 → Installations qualify for a 22% credit.

Do You Qualify for the Federal Solar Tax Credit?

To qualify for the solar panel tax credit, you must:

Own your solar panels and solar system.
Own your home or commercial property. (It doesn’t have to be your primary residence, but you must be the property owner.)

⚠️ Note: Solar leases and power purchase agreements usually do not qualify since you’re not the system owner.

The federal solar tax credit applies to:

Complete solar power packages for home or business.
Product purchases that expand an existing solar system and include at least one solar panel.
Battery systems installed with solar panels.
Labor costs of professional installation.
Related electrical and building materials needed to complete your solar kit.

How to Claim Your Federal Solar Tax Credit

Here are some tips and best practices to make sure you get your credit:

Save all receipts – Keep records of equipment, shipping, installation, tools, parts, and permits.
System in service – The system must be placed in service on or after January 1, 2006, and before December 31, 2034.
File the right forms –
- Residential systems: Use IRS Form 5695.
- Commercial systems: Use IRS Form 3468.
No maximum limit – There is no cap on the solar tax credit amount.
Carryover allowed – If your credit exceeds your tax liability, you can roll the balance into the following year.

⚠️ Disclaimer: Everyone’s tax situation is different. Always consult a tax professional to confirm your eligibility.

Get Started with Solar Energy Today

There’s never been a better time to switch to renewable solar energy. Over the last decade, equipment prices have dropped, and with the federal credit in place, your savings are even greater.

DIY solar panel kits make installation simple — whether you handle it yourself or hire a contractor. At Allgood Solar Supply, we guide you through every step of the process and offer reliable products backed by expert support. Purchase with confidence and start saving today!

Take Advantage of the Solar Tax Credit Now

Ready to reduce your energy bills and take control of your power? The 30% federal tax credit won’t last forever — and the sooner you act, the more you save.

👉 Shop DIY Solar Kits at Allgood Solar Supply today and start powering your home or business with clean, renewable energy.

Tax Incentive