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2023 Federal Tax Credit Solar Incentives

  • Federal tax incentives for solar has been increased to 30%
  • Most FL homeowners installing new systems with SunVena are eligible for the full 30% savings
  • The solar tax credit savings will be reduced to 22% by 2034
  • Home backup batteries connected to solar power projects also qualify

Take Advantage of the Federal Solar Tax Credit.

Homeowners interested in switching to solar need to know about the Investment Tax Credit (ITC). The incentive was increased to 30% in 2022. This is a great time to take advantage of the best cost savings when upgrading to solar.

What is the Solar Tax Credit?

The Investment Tax Credit (ITC), also known as the Residential Clean Energy Credit or Federal Solar Tax Credit, is a federal incentive designed to increase renewable energy production and help more homeowners install solar. This incentive was set to expire after 2024, but through the passed Inflation Reduction Act of 2022, this renewable energy incentive was extended and increased to 30% until 2032. The incentive drops to 26% in 2033, 22% in 2034, and ends in 2035. Now, more than ever, is the right time to go solar!

aerial view of solar home

How Does the Federal Solar Tax Credit Work?

The federal solar tax credit is a non-refundable tax credit. Tax credits are often confused with tax deductions or exemptions, but it’s important to understand the difference, as credits provide maximum savings for homeowners.

Tax Credits

When you claim a tax credit, it reduces the total taxes you owe, dollar for dollar. For example, let’s say you owe $10,000 in taxes and qualify for a $4,500 tax credit. That means the taxes you owe are reduced to $5,500 with the claimed credit.

  • $4,500 tax credit = $4,500 savings

Tax Deductions and Exemptions

Tax deductions and exemptions only reduce your taxable income, which means you save on your taxes, but not as much as you would with a tax credit. If you had a $4,500 tax deduction, it would reduce your taxable income by $4,500, which would save only you $1,080 in taxes.

  • $4,500 tax deduction = $1,080 savings (assuming a 24% tax rate)

Solar Project Costs That Qualify

The federal solar tax credit covers 30% of the total solar equipment and installation cost. These include the costs of:

FL Homeowners can qualify for solar tax credits
Sunset shining on completed panel installation

Solar Tax Credit Eligibility

Our highly experienced Solar Advisors will help you determine your eligibility and work hard to ensure you receive the maximum solar federal tax credit savings you’re entitled. Here’s what you need to qualify.

  • Homeowners are eligible for the ITC credit.
  • Solar or battery backup must be installed and operational the same year you claim the federal tax credit.
  • Individuals applying for the tax credit must have sufficient tax liability.
  • You’ve financed or outright purchased your solar system or energy storage.
  • The solar or energy storage system must be new. Used solar equipment is not eligible.

How to Claim Solar Tax Credits

The process to claim the federal solar tax credit is easy. You must file Form 5695 when you file your federal income taxes. The form will ask you to provide information about your solar PV system, including the cost of the system, the date it was installed, and the name of your solar installer.

The credit can only be claimed for up to the amount you owe in federal income tax liability. Your tax liability will then be reduced by that amount, offering significant cost savings for upgrading your home to a renewable energy source that will save you even more.

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