There’s never been a better time to install residential solar panels, thanks to the federal solar tax credit. The solar tax credit saves you 30% on your solar panel installation costs, making it significantly more affordable to go solar.
If you’re considering solar for your home on the North Coast, this guide will break down everything you need to know about the solar tax credit, how much you can save, and how to claim it.
What Is the Federal Solar Tax Credit?
The solar tax credit goes by many different names. You might hear it referred to as the Investment Tax Credit (ITC) or the Residential Clean Energy Credit. But no matter what you call it, it’s the best solar incentive available in 2025.
The solar tax credit is a federal incentive that encourages homeowners to install solar panels. It reduces your federal income tax liability by a percentage of your solar installation costs for the year you install your system. Its value has changed over the years, but it’s currently worth 30% of your solar installation costs.
Who Can Claim the Residential Solar Tax Credit?
The solar tax credit is available to almost any US taxpayer who installs grid-tied or off-grid solar panels on their home. It’s available for solar installations on existing homes, new construction, primary residences, and secondary residences/vacation homes.
To be eligible, you must:
- Own your home (renters do not qualify)
- Own your solar panel system (leased systems do not qualify)
- Have enough tax liability to claim the credit
If your credit is worth more than what you owe in taxes, you can roll over the remaining credit to the next tax year.
What Costs are Eligible for the Solar Tax Credit?
Almost all of the costs associated with your solar panel installation are eligible for the solar panel tax credit, including:
- Solar panels
- Inverters
- Battery storage systems
- Installation costs
- Permitting fees
How the Solar Tax Credit Works with Battery Storage
The solar tax credit was updated a few years ago in 2022. One of the most exciting updates to the solar tax credit is that battery storage systems now qualify.
You can claim the 30% tax credit if you install solar panels with battery storage, add a battery to an existing solar panel system, or install a standalone solar battery that charges from the electric grid.
How Much Can You Save with the Solar Tax Credit?
The solar tax credit is worth 30% of your solar installation costs, so how much you save depends on how much you spend. For example, if your total solar system costs $25,000, you can claim a $7,500 tax credit on your federal return. Most homeowners end up saving several thousand dollars with the tax credit!
Is the Solar Tax Credit Going Away in 2025?
The solar tax credit was updated in 2022 as part of the Inflation Reduction Act (IRA). The new administration has announced plans to overhaul the IRA, and there is currently a lot of speculation about what will happen to the incentives it funds, including the solar tax credit.
Right now, the solar tax credit is safe. The White House has not announced any changes to the tax credit, and we expect it to remain in place. However, anything could happen. To make sure you can take advantage of this huge opportunity to save, we encourage you to go solar sooner rather than later.
The full tax credit schedule is:
- 30% for solar energy systems installed before January 1, 2033
- 26% for solar energy systems installed after December 31, 2032, and before January 1, 2034
- 22% for solar energy systems installed after December 31, 2033, and before January 1, 2035
- 0% for solar energy systems installed after December 31, 2034
How to Claim the Solar Tax Credit
Claiming your solar tax credit is simple. Here’s what you need to do:
- Keep all documentation – Save your receipts and any documents related to your solar installation.
- File IRS Form 5695 – This is the form for residential energy credits.
- Enter the credit on your 1040 tax return – The amount from Form 5695 will be added to your tax return to reduce your liability.
If you’re thinking about installing solar panels for your home in California, you don’t want to miss out on the solar tax credit. Six Rivers Solar is here to help you navigate your solar options and ensure you take advantage of every available incentive. We’re a locally owned solar panel company that’s been serving homeowners in Humboldt and Del Norte Counties for years and we would love to help you go solar.
Save 30% on residential solar panels with the federal solar tax credit! Call 707-443-5652 or reach out today for a free estimate.
Disclaimer: This information is for general guidance only and not tax advice. We always recommend that you consult a tax professional to confirm your eligibility and maximize your benefits.
