Solar Tax Credit Calculator

Frequently Asked Questions

Does the ITC apply to a second home or rental property?

The 25D residential credit applies only to your primary residence. A second home or rental may qualify under the commercial 48C Investment Tax Credit instead, which has different rules.

What if my tax liability is less than the full credit?

The unused portion carries forward to the following year. You can use it across multiple years until it is fully consumed or the credit expires.

Do lease and PPA customers get the credit?

No. Leased systems pass the ITC to the installer. You must own the system to claim the credit.

What qualifies as an installed cost for the ITC?

Panels, inverters, racking, wiring, battery storage (if 3 kWh or more), permitting fees, inspection fees, and installation labor. Ongoing maintenance does not qualify.

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Estimates for informational purposes only.

Important Disclaimer: Estimates for informational purposes only.

This calculator provides estimates for informational purposes only. Results are based on assumptions and may not reflect actual outcomes. Consult qualified professionals in relevant fields before making important decisions based on these results.

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How It Works

Enter your solar system cost, state, whether you are adding battery storage (and its cost and capacity), and your federal tax liability. The tool sums qualified costs, applies the 30% federal Residential Clean Energy Credit, caps the usable amount at your tax liability, carries any excess forward, and adds an estimated state incentive to show your net out-of-pocket.

Battery storage only counts toward qualified costs when its capacity is 3 kWh or more. Formula: Qualified = solar cost + battery cost (if ≥ 3 kWh). Federal ITC = qualified × 30%. Usable = min(ITC, liability). Carryforward = max(0, ITC − liability). Net = qualified − ITC − state credit.

ITC Details and Timeline

The federal Residential Clean Energy Credit (Section 25D) applies to solar PV, solar water heating, geothermal heat pumps, small wind, fuel cells, and battery storage of 3 kWh or more installed at a US primary residence. The credit percentage: 30% through 2032, 26% in 2033, 22% in 2034, then expiring for residential systems.

The credit is non-refundable - it offsets your federal income tax owed but does not generate a refund. Any unused credit carries forward to subsequent tax years while the credit remains in effect. The "placed in service" year (when the system is installed and operational) determines which credit percentage applies.

Stacking Federal and State Incentives

The federal ITC can be stacked with state tax credits, utility rebates, and SREC (Solar Renewable Energy Credit) programs. One important rule: utility rebates received before installation reduce your qualified cost basis and therefore reduce the ITC amount. Rebates received after installation do not reduce the basis for the ITC.

State programs with their own credits (New York, Massachusetts, South Carolina, Hawaii, New Mexico, Arizona) can significantly reduce out-of-pocket costs further. Check your specific program's interaction rules - some states require you to reduce the state credit base by the federal credit amount.

FAQ

Does the ITC apply to a second home or rental property?

The 25D residential credit applies only to your primary residence. A second home or rental property may qualify under the commercial 48C Investment Tax Credit instead, which has different rules.

What if my tax liability is less than the full credit?

The unused portion carries forward to the following year. If the credit exceeds your total federal income tax for several years, you can use it across multiple years until it is fully consumed or the credit expires.

Do lease and PPA customers get the credit?

No. Leased systems - where a third party owns the panels - pass the ITC to the installer, not the homeowner. You must own the system to claim the credit.

What qualifies as an installed cost for the ITC?

The system cost includes panels, inverters, racking, wiring, battery storage (if ≥ 3 kWh), permitting fees, inspection fees, and installation labor. Ongoing maintenance and electricity costs do not qualify.

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