How does the 30% Solar Tax Credit work?
The federal **Residential Clean Energy Credit** (often called the Investment Tax Credit or ITC) is the single most powerful incentive for residential solar energy in the US.
What expenses qualify?
The 30% tax credit applies to the total gross cost of your system, which includes:
- Solar PV panels or solar tiles.
- Racking, mounting equipment, and electrical wiring.
- Solar inverters (string, microinverters, or optimizers).
- Energy storage batteries (regardless of whether they are charged directly by solar or the grid, as long as capacity exceeds 3 kWh).
- Labor costs for site preparation, assembly, installation, and permitting.
How do I claim it?
You claim the credit when you file your annual federal income taxes by completing **IRS Form 5695** (Residential Clean Energy Credit) and adding the resulting credit to your standard Form 1040.
Can the credit roll over?
Yes. The credit is non-refundable, meaning it cannot reduce your tax liability below zero. However, if your tax credit exceeds your federal tax liability for the year, you can roll the remaining balance over to the next tax year.