The U.S. government understands the importance of reducing our reliance on non-renewable energy sources so the IRS began offering federal tax incentives for citizens and business owners who install solar electric equipment at their home or business.
Frequently Asked Questions About Solar Rebates
Below you’ll find some of the most common questions about getting a solar rebate and how using solar energy can be beneficial in multiple ways:
How do tax credits work?
A tax credit is a dollar for dollar reduction in the total amount of income tax you owe. That means if you claim a 500$ federal tax credit, then your taxes will be reduced by 500$.
How do I get a federal solar tax credit?
You may be eligible for a solar tax credit in the following instances:
- Your solar PV system was installed between January 1, 2006, and December 21, 2021
- The solar PV system is located at your primary, or secondary residence, or apart of a community solar project
- You own the solar PV system and it does not have a lease
- The solar PV system is new or being used by you for the first time
Check brooklynsolarworks.com for more information about solar incentives, and using solar energy in your home.
What is the current federal solar tax credit?
The solar PV cell needs to have been installed by December 31, 2019, to receive a 30% credit. PV systems installed in 2020 will see a decrease in the credit to 26%.
When will the solar tax credit change?
The future of solar energy is influx over the next few years. For those systems installed in 2021, the credit will be decreased to 22% and the current solar tax rebate expires in 2022 unless the government decides to renew it.
What expenses does the solar tax credit cover?
The solar tax credit covers the following expenses:
- Solar PV panels and cells used to provide power for an attic fan, but not the fan
- Contractor fees for system installation including the preparation, assembly, permits, inspections, and developer costs
- System accessories including the wiring, inverters, and mounting equipment
- Sales taxes on eligible solar equipment and accessories
- Energy storage devices charged exclusively by the solar PV panels
Can you claim a solar tax credit more than once?
The solar tax credit only applies to new equipment being installed. If the equipment has been claimed before, then it cannot be claimed again.
Are federal solar tax credits refunds?
The solar income tax credit does not issue a refund check and instead is applied as a credit against the amount of taxes that you owe.
Do federal solar tax credits rollover?
Normally you’ll receive your federal tax credit in the following year after installation of your system, however, if you are unable to use the entire tax credit, then the rebate can be rolled over for up to five years.
How do I file the solar tax rebate?
You must complete IRS Form 5695 and attach it to your federal tax return to take advantage of the solar tax rebate and it will be applied the following year.
Do I have to be a homeowner to claim the solar rebate?
You don’t have to be a homeowner to apply for the tax credit. Tenants that contribute to the costs of an eligible solar system could apply for the tax credit. The tenant must be the owner or part-owner of the solar PV system.