Federal Investment Tax Credit Solar Energy

Filing requirements for solar credits.

Federal investment tax credit solar energy.

Individual income tax transmittal for an irs e file return page last reviewed or updated. The itc applies to both residential and commercial systems and there is no cap on its value. The federal solar tax credit also known as the investment tax credit itc allows you to deduct 26 percent of the cost of installing a solar energy system from your federal taxes. Solar industry has grown by more than 10 000 creating hundreds of thousands of jobs and investing billions of dollars in the u s.

Thanks to the popularity of the itc and its success in supporting the united states transition to a renewable energy economy congress has extended its expiration date multiple times. Since the itc was enacted in 2006 the u s. These two guides one for homeowners and one on the commercial itc provide a concise yet thorough overview of the itc demystifying the tax code with intuitive explanations and examples answering frequently asked questions and explaining the process of claiming the itc. If you end up with a bigger credit than you have income tax due a 3 000 credit on a 2 500 tax bill for instance you can t use the credit to get money back from the irs.

To claim the credit you must file irs form 5695 as part of your tax return. The solar investment tax credit itc is one of the most important federal policy mechanisms to support the growth of solar energy in the united states. Claiming a 1 000 federal tax credit reduces your federal income taxes due by 1 000 1 what is the federal solar tax credit. The federal solar tax credit also known as the investment tax credit itc is one of the best financial incentives for solar in the united states it allows you to deduct 26 percent of the cost of a solar energy system from your federal taxes and there s no cap on its value.

The 30 federal investment tax credit itc is among the most important incentives currently available for solar pv. You calculate the credit on the form and then enter the result on your 1040. The itc was originally established by the energy policy act of 2005 and was set to expire at the end of 2007. About form 4255 recapture of investment credit about form 8453 u s.