U.S. DEPARTMENT OF ENERGY Office of ENERGY EFFICIENCY & RENEWABLE ENERGY Homeowner's Guide to the Federal Tax Credit for Solar Photovoltaics Disclaimer: This guide provides an overview of the federal investment tax credit for those interested in residential solar photovoltaics, or PV. It does not constitute professional tax advice or other professional financial guidance. And it should not be used as the only source of information when making purchasing decisions, investment decisions, or tax decisions, or when executing other binding agreements. What is a tax credit? 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 $1,000.1 The U.S. Department of Energy Solar Energy Technologies Office supports early-stage research and development to improve the affordability, reliability, and performance of solar technologies on the grid. The office invests in innovative research efforts that securely integrate more solar energy into the grid, enhance the use and storage of solar energy, and lower solar electricity costs. What is the federal solar tax credit? · 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.3 · In December 2020, Congress passed an extension of the ITC, which provides a 26% tax credit for systems installed in 2020-2022, and 22% for systems installed in 2023.4 The tax credit expires starting in 2024 unless Congress renews it. . There is no maximum amount that can be claimed. Am I eligible to claim the federal solar tax credit? You might be eligible for this tax credit if you meet all of the following criteria: · Your solar PV system was installed between January 1, 2006, and December 31, 2023. · The solar PV system is located at your primary or secondary residence in the United States, or for an off-site community solar project, if the electricity generated is credited against, and does not exceed, your home's electricity consumption.5 · You own the solar PV system (i.e., you purchased it with cash or through financing but you are neither leasing nor are in an arrangement to purchase electricity generated by a system you do not own). · The solar PV system is new or being used for the first time. The credit can only be claimed on the "original installation" of the solar equipment. What expenses are included? The following expenses are included: · Solar PV panels or PV cells used to power an attic fan (but not the fan itself)