The 30% Solar Tax Credit: Everything You Need to Know (2026)

The 30% federal solar tax credit is the single most powerful financial incentive for going solar in 2026. On the average home solar system, it saves homeowners $4,500–$7,500 — and it’s available to virtually every homeowner in America who installs solar this year.

Here’s everything you need to know about how the credit works, who qualifies, and how to make sure you claim every dollar you’re entitled to.

What Is the Solar Tax Credit?

The federal solar Investment Tax Credit (ITC) is a provision of the Inflation Reduction Act that allows homeowners to deduct 30% of the total cost of a solar system — including equipment and installation — directly from their federal income taxes.

This is a tax credit, not a tax deduction. A deduction reduces your taxable income. A credit reduces your actual tax bill dollar for dollar. If your system costs $20,000, you get a $6,000 credit directly off what you owe the IRS.

How Much Can You Save?

System Cost	30% Tax Credit	Your Net Cost
$15,000	$4,500	$10,500
$20,000	$6,000	$14,000
$25,000	$7,500	$17,500
$30,000	$9,000	$21,000

Who Qualifies for the Solar Tax Credit?

To claim the 30% ITC, you must meet these requirements:

• You own the system. If you lease solar panels or use a Power Purchase Agreement (PPA), the installer owns the system and claims the credit — not you.
• It’s your primary or secondary residence. The credit applies to your main home or a second home. It does not apply to rental properties you don’t live in.
• The system is new. The credit applies to new installations only, not used equipment.
• You have federal tax liability. The credit reduces what you owe in federal income taxes. If your credit exceeds your tax liability for the year, you can carry the remainder forward to future tax years.

Does the Credit Apply to Battery Storage?

Yes — as of 2023, the ITC applies to battery storage systems even if they’re installed separately from solar panels, as long as the battery is charged primarily by solar. This is a significant change from prior law.

When Does the Solar Tax Credit Expire?

The 30% rate is available through December 31, 2032. After that:

• 2033: Credit drops to 26%
• 2034: Credit drops to 22%
• 2035: Credit expires for residential installations (unless renewed by Congress)

On a $20,000 system, waiting until 2033 costs you an extra $800 in taxes. Waiting until 2034 costs $1,600 more. There’s no financial reason to delay.

State Solar Incentives on Top of the Federal Credit

Many states offer additional incentives that stack on top of the federal ITC. New York offers a 25% state tax credit (up to $5,000). Massachusetts has the SMART program that pays you monthly for power produced. New Jersey has TRECs. Arizona offers a 25% state credit up to $1,000.

See the full list of available incentives by state on our Solar Incentives & Tax Credits page.

How to Claim the Solar Tax Credit

Claiming the credit is straightforward:

1. Install your solar system and pay for it (or finance it with a solar loan)
2. File IRS Form 5695 with your federal tax return
3. Enter the credit amount on Schedule 3 of Form 1040
4. Your tax liability is reduced by 30% of your system cost

Your solar installer will provide documentation of the system cost. Most tax preparation software walks you through Form 5695 automatically. Consult a tax professional if you have questions about carry-forward provisions.

Ready to Go Solar?

The 30% tax credit makes solar a no-brainer for most homeowners — but only if you act before 2033. Get free competing quotes from top-rated local installers and see exactly how much you can save. Request your free solar quotes today.

If you’re considering adding EV charging to your solar setup, the Enphase IQ EV Charger 2 integrates directly with Enphase solar systems and qualifies for the same 30% tax credit when installed as part of your solar project.

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