09/18/2021
The ITC was originally established by the Energy Policy Act of 2005 and was set to expire at the end of 2007. Thanks to the popularity of the ITC, and its success in supporting the United States’ transition to a renewable energy economy, Congress has extended its expiration date multiple times, including most recently in December 2020 to extend the ITC at 26 percent for two additional years. Now, the solar investment tax credit is available to homeowners in some form through 2021. Here are the specifics:
2016 – 2019: The tax credit remains at 30 percent of the cost of the system.
2020-2022: Owners of new residential and commercial solar can deduct 26 percent of the cost of the system from their taxes.
2023: Owners of new residential and commercial solar can deduct 22 percent of the cost of the system from their taxes.
2024: Owners of new commercial solar energy systems can deduct 10 percent of the cost of the system from their taxes. There is no federal credit for residential solar energy systems.
How the solar tax credit works:
As long as you own your solar energy system, you are eligible for the solar investment tax credit. Even if you don’t have enough tax liability to claim the entire credit in one year, you can “rollover” the remaining credits into future years for as long as the tax credit is in effect. However, remember that if you sign a lease or PPA with a solar installer, you are not the owner of the system, and therefore cannot claim the tax credit.
How do I claim the federal solar tax credit?
You claim the investment tax credit for solar when you file your yearly federal tax return. Remember to let your accountant know you’ve gone solar in the past year, or if you file your own taxes, simply use GPS's step-by-step guide on how to claim the solar ITC.
