Solar Tax Credit 30 Percent

Update (2026): The federal Residential Clean Energy Credit (Section 25D) expired December 31, 2025, following the passage of the One Big Beautiful Bill Act (OBBBA). The information below reflects historical credit availability. Check state and local programs for current incentives.

Over 3.9 million homes in the U.S. now have solar installations, a number that continues to climb as electricity rates increase by an average of 4.3% annually. The federal government directly incentivizes this transition, offering a nonrefundable tax credit that returns nearly a third of a project's total cost directly to homeowners. So this isn't just about environmental benefits. It's about a direct, government-backed reduction in energy expenses available right now.

What is the 30% Solar Tax Credit and What Specific Equipment Qualifies?

The federal Residential Clean Energy Credit (Section 25D) ended for expenditures made after December 31, 2025, and the IRS treats an expenditure as made when installation is completed (IRS FS-2025-05). Federal tax credits for this work have ended, but state, local and utility rebates may still apply; check what is available at your address with the DuloCore rebate calculator. The credit is available for systems placed in service beginning in 2022.

The federal Residential Clean Energy Credit (Section 25D) ended for expenditures made after December 31, 2025, and the IRS treats an expenditure as made when installation is completed (IRS FS-2025-05). And the primary qualifying equipment includes solar photovoltaic (PV) panels used to generate electricity and solar water heaters certified by the Solar Rating Certification Corporation. So beyond solar, the credit also applies to battery storage technology with a capacity of 3 kilowatt-hours (kWh) or greater, geothermal heat pumps that meet ENERGY STAR requirements, and small wind turbines. But all associated costs, including labor for onsite preparation, assembly, original installation, and piping or wiring to connect the equipment to the home, are eligible for the 30% credit. This comprehensive coverage ensures the entire project cost, not just the hardware, receives the tax benefit. More details on solar panel rebates are available for homeowners.

Are There Any Financial Limits or Income Restrictions on the 30% Solar Tax Credit?

The Residential Clean Energy Credit has no maximum credit limit and no income restrictions for homeowners claiming the incentive through December 31, 2025. The credit amount is calculated as a direct 30% of the total qualified project expenditures, offering an uncapped financial benefit for residential installations.

The federal Residential Clean Energy Credit (Section 25D) ended for expenditures made after December 31, 2025, and the IRS treats an expenditure as made when installation is completed (IRS FS-2025-05). So if a homeowner spends $30,000 on a qualifying solar and battery storage system, they are eligible for a $9,000 tax credit. And there are no income caps restricting who can claim the credit; eligibility is not phased out for higher-income households. This makes the incentive accessible to a wide range of taxpayers. But the credit is nonrefundable, meaning it can only reduce a taxpayer's liability to zero. Any excess credit from the 30% calculation that exceeds the tax liability for a given year can be carried forward to future tax years, ensuring the full value is eventually received.

"There are no income limitations on this tax credit, and you can carry forward any unused amount of the credit. For example, if you can’t use the full amount of the credit in one year, the unused portion can be used to lower your tax bill in the following years." — U.S. Department of Energy

What Are the Key Dates for the 30% Solar Tax Credit: Start, End, and Future Outlook?

The 30% Residential Clean Energy Credit rate is effective for all qualifying systems placed in service between January 1, 2022, and December 31, 2025. After December 31, 2025, the credit percentage begins a scheduled phase-out, reducing its value for projects installed in subsequent years.

The Inflation Reduction Act of 2022 established a clear, long-term timeline for this powerful incentive. And for a full decade, from the start of 2022 through the end of 2025, the credit remains fixed at 30% of the total installation cost. So this provides homeowners with a stable, predictable window to plan and execute their clean energy projects. But the rate will not last forever. For systems placed in service in 2033, the credit amount steps down to 26%. And in its final year, 2034, the credit reduces further to 22%. After December 31, 2025, the Residential Clean Energy Credit is scheduled to expire completely unless extended by new legislation. This structure encourages earlier adoption to maximize the financial benefit.

How Do I Claim the 30% Solar Tax Credit and What Forms Are Required?

Form 5695 only covers qualifying work completed by December 31, 2025 and claimed on a 2025 return; the federal 25C and 25D credits ended after that date (IRS FS-2025-05). The process requires accurate records of all project costs, including equipment, labor, and permitting fees.

To claim the credit, a taxpayer must first determine the full cost of their qualifying clean energy system. And this includes the price of the equipment and all installation-related expenses. Form 5695 only covers qualifying work completed by December 31, 2025 and claimed on a 2025 return; the federal 25C and 25D credits ended after that date (IRS FS-2025-05). The form calculates the 30% credit amount, which is then transferred to Schedule 3 (Form 1040), Additional Credits and Payments. But it is essential to retain all invoices, contracts, and proof of payment for tax records. The system must be "placed in service" during the tax year for which the credit is being claimed, meaning it is fully installed and operational. Use our free rebate calculator to estimate your potential savings.

Can I Combine the 30% Solar Tax Credit with Other Incentives and Rebates?

The 30% federal solar tax credit can be combined with state and local incentives, but the interaction depends on the type of rebate received. Rebates from public utilities for installing solar must be subtracted from the system's cost before calculating the 30% federal credit (this federal credit ended for expenditures made after December 31, 2025).

Stacking incentives is a common strategy, but the rules require careful attention. And according to the IRS, if a public utility provides a rebate for a solar installation, that amount is considered a non-taxable price reduction. So the homeowner must subtract the utility rebate from their total system cost before applying the 30% federal credit calculation. For example, a $20,000 system with a $2,000 utility rebate has a new cost basis of $18,000, resulting in a $5,400 federal credit. But state tax credits are treated differently and typically do not reduce the federal credit amount. This allows homeowners to benefit from both state and federal programs simultaneously. Explore other available energy tax credits to maximize your savings.

Residential Clean Energy Incentive Comparison

Official Sources

• IRS Form 5695, Residential Energy Credits — The official IRS form and instructions required to claim federal home energy credits.
• ENERGY STAR Homeowner Tax Credits — Federal guidance on tax credits for energy-efficient home improvements, including solar and geothermal systems. (note: the federal 25C and 25D credits ended for projects completed after December 31, 2025)
• DSIRE Database of State Incentives — A comprehensive database of state, local, utility, and federal incentives that promote renewable energy and energy efficiency.

Frequently Asked Questions About the 30% Solar Tax Credit

What are the eligibility requirements for the 30% federal solar tax credit?

To be eligible, you must own your home (it can't be a rental property) and the solar PV system must be new or being used for the first time. The credit can only be claimed on the original installation of the equipment. The home must be located in the United States and serve as your primary or secondary residence.

How do I claim the 30% solar tax credit on my federal income taxes?

You claim the credit when you file your annual federal taxes. Form 5695 only covers qualifying work completed by December 31, 2025 and claimed on a 2025 return; the federal 25C and 25D credits ended after that date (IRS FS-2025-05).

When does the 30% federal solar tax credit expire?

The 30% credit rate is available for systems placed in service from January 1, 2022, through December 31, 2025. The credit percentage then reduces to 26% for systems installed in 2033 and to 22% for systems installed in 2034. The credit is set to expire completely after December 31, 2025.

Does the 30% solar tax credit apply to battery storage or other system components?

Yes, the credit applies to battery storage technology with a capacity of 3 kilowatt-hours (kWh) or greater. It also covers all labor costs for onsite preparation, assembly, and original installation, as well as the piping or wiring required to connect the system to the home. This ensures the entire project cost is included.

Is there a maximum limit to the 30% federal solar tax credit amount?

The federal Residential Clean Energy Credit (Section 25D) ended for expenditures made after December 31, 2025, and the IRS treats an expenditure as made when installation is completed (IRS FS-2025-05). The credit is a straight 30% of the total cost of the system and its installation, regardless of how expensive the project is. This is a key difference from other capped energy tax credits.

Last updated April 14, 2026 — reviewed by DuloCore Editorial. About our authors.

Check your California solar rebate eligibility — see the programs you qualify for and the dollar amounts on our California solar rebate finder.