What is the Federal Tax Credit, and how do you qualify when going solar?
The Federal Solar Tax Credit is the single biggest financial incentive to installing solar on your home. The federal government is subsidizing the cost of going solar as a way of encouraging homeowners to make the switch and to stimulate investment in the solar industry as a whole. The tax credit is a one-time incentive that can be applied toward the purchase and installation of solar, for the year in which in was installed.
With the passing of the Inflation Reduction Act in 2022, the value of the Federal Solar Tax Credit was increased to 30% through 2034, meaning that homeowners can qualify for up to a 30% subsidy on the total cost of their solar system. Eligibility is tied to tax liability, meaning you should confirm with your tax professional that you have enough liability to claim the entire credit.
To apply for the tax credit, you will submit Form 5695 when filing your return for the year in which your solar was installed.