Homeowners can tax a tax credit for installing solar panels during 2022. Here’s how it works and what you need to do to qualify.
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This post is provided for general information only. Please confirm the details and circumstances of your unique situation with your tax accountant or other appropriate advisor before taking action.
How much is the solar tax credit?
The solar tax credit is 26% of the installation cost for solar systems installed in 2020, 2021, and 2022. The credit will still be available in 2023 but at a reduced rate of 22%.
The tax credit was 30% through 2019. It will not be available in 2024 unless Congress renews it.
The date the installation was completed is the date that determines your credit.
Who is eligible for the solar credit?
You are eligible for the solar credit if you meet the following requirements.
- Completed installation in an eligible year.
- Own the home as a primary or secondary residence.
- Installed at your home or as part of a community project. If part of a community project, the system can’t provide more electricity than you need for your home.
- Paid for the solar system with cash or by financing. Leases or arrangements to purchase electricity from a system you don’t own are not eligible.
- Be a new installation (not repairs or replacement panels).
What expenses qualify for the solar credit?
You can claim the following expenses for your credit.
- Solar panels and PV cells
- Installation costs including labor, permitting fees, and inspections
- Related equipment such as wiring, inverters, and mounting equipment
- Sales taxes on eligible expenses
If you receive a rebate from your utility provider, you may need to subtract that rebate from your eligible expenses.
State solar tax credits generally do not reduce your eligible expenses or your federal solar tax credit.
How do you claim the solar tax credit?
You can claim the solar tax credit by filing Form 5695 with your Form 1040 Individual Tax Return. Form 5695 asks for your eligible expenses and helps you to calculate your credit.
Like other tax credits and deductions, you need to keep receipts for all of the expenses you’re claiming. Your documentation should cover all of the eligibility requirements, such as showing that you own your system through financing instead of that you’re leasing it. If you received paper receipts instead of online documentation, you may want to check out how to keep receipts from fading.