Solar credit

You can qualify for the Federal Solar credit as long as your solar system is new or being used for the first time between January 1, 2006 and December 31, 2023.

Non-Refundable Credit - This is a credit is nonrefundable, that will only reduce your tax liability to zero. Remaining credit may be carried to the next tax year. Maximum Credit – There is no specific maximum, however, and since it is not a refundable credit, the benefit may be spread over several years, and if not utilized by the time the credit is phased out, you may not get the benefit of the entire credit.

Credit percentage - If you are a homeowner that recently installed a solar panel system in 2022, you are eligible to claim a federal tax credit that covers 30% .

Costs Eligible

• 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).

• Sales taxes paid for eligible solar installation expenses (though some states waive sales tax on PV system equipment)

Federal Solar Tax Credit Eligibility

• You must own the system outright (not lease it)

• Completed installation in an eligible year.

• The system must be located in the United States

• The system must be located at your primary or secondary U.S. residence or for an off-site community solar project

• 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.

• Be a new installation (not repairs or replacement panels).

You can claim the solar tax credit by filing Form 5695 with your Form 1040 Individual Tax Return. Please contact us to help you with filing this correctly - contact@2cherrytax.com