Solar Tax Credit Calculator

No. The Federal Residential Clean Energy Credit (Section 25D), commonly called the Solar ITC, expired December 31, 2025. Homeowners who install residential solar systems in 2026 or later are no longer eligible for this federal tax credit. The credit previously provided a 30% deduction from federal income tax liability for qualified solar installations. If you installed solar before December 31, 2025, you may still be able to claim the credit on your 2025 tax return — consult a tax professional to confirm your eligibility.

State incentives vary widely and are independent of the expired federal credit. Common types include: utility rebates (a direct reduction in installation cost paid by your utility), state income tax credits (a percentage of system cost deducted from state taxes owed), property tax exemptions (the added home value from solar is excluded from property tax assessments), and sales tax exemptions (no sales tax on solar equipment purchases). Not all states offer all types — some offer none. The DSIRE database at dsireusa.org maintained by NC Clean Energy Technology Center is the authoritative, up-to-date source for state incentive programs.

Section 48E is a separate commercial Investment Tax Credit that covers solar systems placed in service after December 31, 2024. It is distinct from the residential Section 25D credit that expired. Section 48E generally applies to commercial, industrial, and utility-scale installations — not typical residential rooftop solar. However, if your property has a commercial use component (a home office that constitutes your primary business location, a rental unit, or agricultural operations), Section 48E may partially apply. This determination is complex and depends on how your property is classified for tax purposes. Consult a licensed CPA or tax attorney before assuming Section 48E eligibility.

Yes — especially now that the federal 25D credit has expired. A solar installation is typically a $15,000–$40,000 decision, and the tax implications vary based on your income, filing status, state of residence, and how your property is classified. A qualified tax professional or CPA can: confirm which state incentives you're eligible for, determine whether Section 48E has any relevance to your situation, advise on the timing of your installation for maximum state incentive capture, and ensure your documentation meets IRS and state requirements. This calculator provides estimates for informational purposes only and is not a substitute for professional tax advice.

Yes — the Section 25D Residential Clean Energy Credit (which expired December 31, 2025) allowed unused credit to carry forward to subsequent tax years if your federal tax liability in the year of installation was insufficient to absorb the full credit. There is no statutory expiration on carryforward for credits earned before the 25D sunset; in practice, you continue filing IRS Form 5695 each year until the credit is fully used or you no longer owe federal income tax. The exact treatment of multi-year carryforward against future tax years depends on individual circumstances and should be reviewed with a licensed CPA or tax professional before relying on any specific outcome on your return.

No — the Section 25D credit applied only to the legal owner of the solar system. If you signed a solar lease or a Power Purchase Agreement (PPA), the installation company or financier owned the equipment and claimed the credit on their corporate tax return; you simply paid for the electricity it produced. If you bought the system with cash or financed it through a solar loan (where you take ownership of the equipment), you were the eligible taxpayer. The ownership distinction was critical and frequently misunderstood at the point of sale; always verify ownership documentation with a licensed CPA before claiming any solar credit on your return.

State solar tax credits and rebates generally stacked on top of the federal Section 25D credit, but the interaction varied by state. Most states allowed the full federal credit to be claimed without reducing the state credit. However, utility rebates and some state cash incentives reduced the cost basis used to calculate the federal 25D credit — the IRS treated rebates as a price reduction rather than as income. For example, a $20,000 system with a $2,000 utility rebate had a federal-creditable basis of $18,000, not $20,000. Stacking rules are complex and state-specific; consult a licensed CPA before assuming any combined incentive total.

To claim the Section 25D credit (for systems installed by December 31, 2025), you typically needed: a paid invoice from your installer showing the total system cost, an itemized breakdown of equipment (panels, inverter, mounting, labor), the date the system was placed in service (typically the permission-to-operate or PTO date from your utility, not the contract or installation completion date), and a copy of your manufacturer's certification statement confirming the equipment qualified. Retain these records for at least 7 years in case of an IRS audit. IRS Form 5695 (Residential Energy Credits) was filed with your federal return; consult a licensed CPA for documentation specific to your filing.

Yes for batteries, conditionally — the Inflation Reduction Act extended Section 25D to cover standalone battery storage with capacity of 3 kWh or larger, even when installed without solar, for systems placed in service through December 31, 2025. The credit equaled 30% of installed battery cost. EV chargers were covered separately under Section 30C (the Alternative Fuel Vehicle Refueling Property Credit), which had different eligibility rules, a $1,000 residential cap, and required the home to be located in a qualifying low-income or non-urban census tract. Each credit had distinct documentation requirements; consult a licensed CPA for your specific equipment.

The Section 25D residential credit could be claimed on a second home or vacation home you used personally — but not on rental property or a home used exclusively for business. The IRS required the property to be a residence you used personally during the year. For partial-rental situations (Airbnb, short-term rental, or part-year rental), the credit was prorated based on personal use. Rental properties may have qualified under the separate commercial Section 48E credit, which had different rules and required different filings. This determination was fact-specific; consult a licensed CPA before claiming the credit on a non-primary residence.