What’s a tax credit? It’s an incentive that reduces the amount of income tax that you’d owe.

When you get a solar system installed on your home, you are eligible for both federal and local or state tax incentives.

Let’s talk about both.

Federal Solar Tax Credit

The Federal Solar Tax Credit, also known as the Investment Tax Credit or ITC started in 2005 and has been extended several times. This kind of residential solar energy credit allows a homeowner to claim a percentage of the credit on federal income taxes for the cost of the system

In 2020, all solar systems installed were eligible for a 30% tax credit. By the end of the year, Congress passed an extension of the ITC, allowing a provision of 26% tax credit for systems installed from 2020-to 2022. This will then be lowered to 22% in 2023, potentially expiring in 2024 unless congress decides to renew it.