Incentives
The Federal Solar Tax Credit
The residential clean energy credit returns 30% of your installed solar cost. Here is who qualifies, what counts, and how to file Form 5695.
The residential clean energy credit is worth 30% of what you spend on a qualifying solar installation, with no dollar cap. On a $24,000 Texas installation, that is $7,200 back against your federal tax liability.
Who qualifies
You must own the system, either with cash or a loan. The property must be a home you live in, and it can be a primary or secondary residence in the United States. Rental properties you do not live in do not qualify under this credit.
You must also have federal income tax liability. The credit is nonrefundable, so it reduces tax owed rather than generating a payment. Unused credit carries forward.
What expenses count
The eligible basis is broader than most homeowners expect.
- Solar panels and mounting hardware
- Inverters, optimizers, and monitoring equipment
- Battery storage of 3 kWh capacity or more
- Contractor labor for onsite preparation, assembly, and installation
- Wiring, conduit, and required electrical panel work tied to the installation
- Permitting fees and inspection costs
How to claim it
File IRS Form 5695 with your federal return for the tax year the system was placed in service, meaning the year installation was completed and inspected, not the year you signed the contract.
Keep the signed contract, the final invoice showing what you paid, the permission-to-operate letter, and any rebate documentation. If a utility rebate reduced your out-of-pocket cost, your basis may need to be reduced accordingly.