Solar Tax Credit

Claiming Solar Tax Credit

Solar consumers are eligible for federal tax incentives for the purchase and installation of eligible solar systems, including both solar photovoltaics (PV) and solar hot water (solar thermal) systems, as well as other renewable energy investments. This is not tax advice. Please seek professional advice from a qualified tax advisor to check the applicability and eligibility before claiming any tax benefits or exemptions. The 2008 legislation extended the solar investment tax credit (ITC) through December 31, 2016 and made other modifications to the tax credits. Legislation in late 2015 renewed these credits for five years with an incremental de-escalation of the credits. 

The solar ITC offers:

  • A consumer must have a federal tax liability to take advantage of the solar investment tax credit.
  • The federal tax credit is a one-time credit, but may be carried forward (and possibly back) if not completely useable in the system installation tax year. Rules about carrying forward and backward may vary between residential and commercial tax filers; please consult a tax professional for the current rules.
  • Eligible projects may take a "grant in lieu of tax credit" under Section 1603 of the American Recovery and Reinvestment Tax Act of 2009 (Section 1603). The 1603 grant program is administered by the United States Department of the Treasury (Treasury). By receiving payments for property under section 1603, applicants are electing to forego tax credits with respect to such property for the taxable year in which the payment is made or any subsequent taxable year.
  • The IRS current federal tax form for the Investment Credits is Form 3468 is available at www.irs.gov/formspubs
  • Business owned systems may also be eligible for MACRS 5-year Accelerated Depreciation using IRS federal form 4562 available at www.irs.gov/formspubs. For more info on commercial tax benefits please contact your tax preparer or a tax attorney.
  • Municipal and non-profit entities do not have to worry about these tax issues, as they are generally tax-exempt.
  • The solar system owner has the ability to take advantage of the solar tax credit. Entities without a federal tax liability sometimes use third-party system owner arrangements to install solar since a third-party can take advantage of the solar investment tax credit, passing along some savings to the solar system host customer.


Additional Solar Tax Credit Information Resources