Investing in solar energy solutions like solar panels, energy storage devices, and solar generators gives you clean energy and backup power in emergencies, but sometimes the cost scares people off. Fortunately, the federal solar tax credit makes investing in solar and energy storage batteries more affordable. We’ll walk you through the basics of the tax credit but we are not tax or legal advisors so please contact your tax or legal professional so you can make an informed decision.
What Is the Federal Solar Tax Credit?
The Investment Tax Credit, sometimes called the federal solar tax credit, lets taxpayers claim a nonrefundable tax credit for a portion of the costs associated with solar and/or home energy storage system installations. In August 2022, the U.S. Congress extended the solar tax credit and increased it to 30% for systems installed between 2022 and 2032.
This tax credit also now applies to some energy storage devices if they are installed after December 31,2022.
Solar Tax Credit Eligibility
Please consult a tax professional for clear guidance on whether you’re eligible to claim a solar tax credit. Here are a few things to know about eligibility guidelines:
- Your solar panels and energy storage devices must be installed in connection with a dwelling used as a residence by the taxpayer.
- Installation of the system must be completed during the year you’re filing taxes for. For example, if you purchased solar panels in 2022, but have not installed them yet, they can NOT be claimed on your 2022 taxes with this credit.
- You do not have to be a homeowner to be eligible for this tax credit.
- Your equipment must be installed, but it does not have to be connected to the electric grid as long as it is still generating electricity to be used at your residence.
- Solar panels do not have to be mounted on the roof to be eligible.
- You can still claim the tax credit even if you finance your system. Consult a tax expert for details on how this works.
For more details on eligibility, see this guide from the Federal Office of Energy Efficiency and Renewable Energy.
How Much does the Federal Solar Tax Credit Cover?
There is not a lifetime limit or dollar limit on this tax credit. It covers 30% of qualifying costs in the given year. This means that you could install solar in 2023 and file for the credit on your 2023 taxes; if you purchase and install new qualifying equipment in 2025, you’d be able to file for the credit again that year for the equipment installed in 2025.
What Expenses are Covered by the Solar Tax Credit?
Once again, we suggest consulting with a tax professional for specific guidance about what expenses will be covered. Here are some of the expenses that can be covered by the solar tax credit:
- Energy storage devices that are rated for at least 3 kilowatt hours, as long as they were installed after December 31, 2022. The Goal Zero Yeti 3000X and Yeti 6000X are systems above 3KWh that may qualify for the tax credit.
- Solar panels
- Labor costs for installation
- Equipment required for installation (For example, wiring and mounting equipment)
Solar panels and energy storage devices like power stations can help you reduce energy costs long-term and provide home backup power. Feel free to reach out to us at any time for help finding the right energy solutions for your lifestyle.
Disclaimer:
Goal Zero does not guarantee any tax credit eligibility and this article is for educational purposes only. It does not constitute legal or financial advice. We encourage you to consult a professional tax expert for help with determining eligibility.