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Federal Solar Tax Credits

Updated: Oct 13, 2020

A tax credit is a dollar-for-dollar reduction in the amount of income tax you would otherwise owe. For example, claiming a $1,000 federal tax credit reduces your federal income taxes due by $1,000.


The federal residential solar energy credit is a tax credit that can be claimed on federal income taxes for a percentage of the cost of a solar photovoltaic (PV) system.2 (Other types of renewable energy are also eligible for similar credits but are beyond the scope of this guidance.)

The system must be placed in service during the tax year and generate electricity for a home located in the United States. There is no bright-line test from the IRS on what constitutes “placed in service,” but the IRS has equated it with completed installation.


A solar PV system must be installed before December 31, 2020, to claim a 26% credit. It will decrease to 22% for systems installed in 2021. And the tax credit expires starting in 2022 unless Congress renews it.


There is no maximum amount that can be claimed


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