The federal solar Investment Tax Credit (ITC) remains one of the most powerful incentives for going solar in 2026. Here's everything you need to know about how it works and how to take advantage of it.

What Is the Solar Tax Credit?

The solar ITC is a federal tax credit that allows you to deduct 30% of the cost of installing a solar energy system from your federal taxes. If your solar system costs $25,000, you can claim a $7,500 credit on your tax return.

How Long Does It Last?

Thanks to the Inflation Reduction Act of 2022, the 30% credit is locked in through 2032. After that, it steps down:

  • 2022–2032: 30% tax credit
  • 2033: 26% tax credit
  • 2034: 22% tax credit
  • 2035 and after: 0% for residential (10% for commercial)

Who Qualifies?

To claim the ITC, you must:

  • Own the solar system (purchased, not leased)
  • Have the system installed on your primary or secondary residence in the US
  • Have enough federal tax liability to use the credit
  • The system must be new (not previously installed)

What Costs Are Covered?

The 30% credit applies to the total cost of your solar installation, including:

  • Solar panels and inverters
  • Mounting hardware and wiring
  • Labor for installation
  • Permitting and inspection fees
  • Battery storage systems (added by the Inflation Reduction Act)
  • Sales tax on the system

How to Claim the Credit

Claiming the solar tax credit is straightforward:

  1. Install your solar system and keep all invoices and receipts
  2. File IRS Form 5695 (Residential Energy Credits) with your tax return
  3. The credit reduces your federal tax liability dollar-for-dollar
  4. If the credit exceeds your tax liability, you can carry it forward to future years

State Incentives Stack on Top

Many states offer additional incentives that stack with the federal ITC. For example, New York offers up to $5,000 in state tax credits, South Carolina offers 25%, and Massachusetts provides SMART incentives. Check your state page for local incentives.

Don't Wait Too Long

While the 30% credit lasts through 2032, solar installation costs are subject to supply chain fluctuations. Locking in your installation now guarantees you get the current pricing plus the full tax credit. Many homeowners save $7,000–$10,000 through the ITC alone.

Check current electricity rates in your area at ZipElectricity.com to see how much you could save.