Federal Tax Credit
When you purchase a solar photovoltaic (PV) system, you are eligible for the Investment Tax Credit known as the Residential Clean Energy Credit that you can claim on your federal income taxes for a percentage of the cost of the system.
In 2021, the Investment Tax Credit (ITC) provided a 26% tax credit for systems installed between 2020 through 2022. The ITC will now provide 30% for systems installed in tax years 2022 through 2032
To qualify for the 30% federal tax credit, your solar system needs to be installed and deemed operation by a city inspector in any of the tax years 2022-2032. The 30% credit applies retroactively to systems installed in 2022 when the credit was still at 26%.
The Residential Clean Energy Credit is a dollar-for-dollar tax credit worth 30% of the total cost of solar and/or battery storage expenditures. It’s essential to note that you can only claim the credit once. The credit is a deduction, not a refund. As a non-refundable tax credit, it lowers your tax liability on your federal tax return. If you do not have sufficient tax liability, the tax credit can be rolled over into future years.
What Does the Federal Solar Tax Credit Cover?
If you are a homeowner that recently installed a solar panel system in 2023, you are eligible to claim a federal tax credit that covers 30% of the following:
- Solar panels cost;
- Solar equipment costs like inverters, wiring and mounting hardware;
- Labor costs for solar panel installation, including fees related to permitting and inspections;
- Solar power storage equipment costs like solar batteries. Storage devices must have a capacity rating of at least 3 kilowatt-hours (kWh).
Contact us for more information on incentives or visit: www.dsireusa.org
Washington Solar Sales Tax Exemption
As of July 1, 2019, all solar equipment for systems less than 100 kW is exempt from state and local sales and use taxes. This tax exemption is good through December of 2029 and can often save solar buyers thousands of dollars!