Solar Motor Tax Credit
Information Regarding Your Tax Credit
The Residential Clean Energy Credit is the current name of the solar tax credit that was originally known as The Investment Tax Credit (ITC) and created by the Energy Policy Act of 2005. With the signing of The Inflation Reduction Act Of 2022, the ITC was renamed the Residential Clean Energy Credit, the value was increased to 30%, and the deadline was extended through December 31 of 2034.
- Skylights installed in 2020 –2021 receive a 26% Federal tax credit.
- Skylights installed in 2022-2032 receive a 30% Federal tax credit.
- Skylights installed in 2033 receive a 26% Federal tax credit.
- Skylights installed in 2034 receive a 22% Federal tax credit.
The Residential Clean Energy Credit is a solar tax credit that’s like a coupon for 30% off your home solar installation, backed and funded by the federal government. In the year that you install solar, the Residential Clean Energy Credit can greatly reduce or even eliminate the taxes that you would have otherwise owed to the federal government.
How Does The Federal Solar Tax Credit Work?
As a homeowner, you can claim a federal solar tax credit for the amount of money that you pay towards installing solar, and reduce the amount you owe when you file your yearly federal tax return. (The solar tax credit does not apply to state tax or any local taxes.) The Residential Clean Energy Credit can be filed one time for the tax year in which you install your system using Tax Form 5695. The credit received is then calculated dollar-by-dollar as a reduction of your federal tax liability, so if you receive $1,000 in credits, you’ll owe $1,000 less in taxes. Once you calculate how many credits you’ve received, you will want to add your renewable energy credit information to a typical Form 1040 while filing your taxes.
Note: that a tax credit is different from a tax refund. In order to claim a tax credit, you must owe taxes to the government, so that the tax credit can cancel out some or all of the amount that you owe.