Is the 30% solar tax credit a refund check?

No, it is a non-refundable tax credit. It reduces the federal income tax you owe dollar-for-dollar. If your tax credit is larger than the taxes you owe in a single year, you can roll the remaining balance forward to future tax years.

Does a new roof qualify for the solar tax credit?

Generally, no. Traditional roofing materials do not qualify for the solar tax credit. However, solar shingles (like Tesla Solar Roof) do qualify. Always consult a licensed tax professional regarding your specific roof repair.

Do solar batteries qualify for the tax credit?

Yes! Standalone battery storage systems with a capacity of at least 3 kilowatt-hours (kWh) installed after December 31, 2022, qualify for the 30% ITC, even if they aren't paired with solar panels.

Can I claim the tax credit if I lease my solar panels?

No. If you sign a Solar Lease or a Power Purchase Agreement (PPA), the solar company owns the system and they claim the tax credit. To claim the ITC yourself, you must purchase the system with cash or a solar loan.

Financing

Understanding the 30% Federal Solar Tax Credit (ITC)

April 28, 2025 5 min read

Going solar is a major investment, but the United States government offers a massive incentive to help homeowners make the switch: the Residential Clean Energy Credit, commonly known as the ITC (Investment Tax Credit).

This tax credit can shave thousands of dollars off the upfront cost of your solar and battery installation. Here is a complete breakdown of how it works in 2025.

Disclaimer: CT Solar Installation is a solar installation company, not a CPA. This information is for educational purposes. Always consult a licensed tax professional regarding your personal tax situation.

What is the Solar Tax Credit?

The Federal Solar Tax Credit allows you to deduct 30% of the total cost of your solar energy system from your federal income taxes. There is no cap on the value of the credit.

For example, if you purchase a solar panel system for $30,000, your tax credit will be $9,000. When you file your taxes, you owe the IRS $9,000 less. If you normally get a refund, that refund will increase by $9,000 (provided you have enough tax liability).

What qualifies for the ITC?

Solar Panels: The panels themselves, including integrated solar shingles like the Tesla Solar Roof.
Balance of System: Inverters, mounting equipment, wiring, and other essential electrical hardware (like a main panel upgrade if strictly required for the solar installation).
Labor: All contractor labor costs for onsite preparation, assembly, and installation.
Battery Storage: Standalone or solar-paired batteries (like the Tesla Powerwall) with a capacity of 3 kWh or greater.

How long will the 30% credit last?

Thanks to the Inflation Reduction Act of 2022, the ITC was locked in at 30% for over a decade. It will remain at 30% for systems installed through the end of 2032. In 2033, it drops to 26%, and in 2034, it drops to 22%.

How do you claim the credit?

To claim the credit, you must file IRS Form 5695 (Residential Energy Credits) with your standard Form 1040 when you file your annual taxes. You will calculate the credit on Part I of the form based on the total cost of your system.

See how much you can save

Want to see exactly what your 30% tax credit would look like? We provide free, transparent quotes that break down your gross cost, your federal tax credit, and your net investment.

Calculate My Savings