Does My Solar Tax Credit Carryover?
January 19, 2024 | Reading Time: 5 minutes
The federal solar tax credit aka Residential Clean Energy Credit is the largest solar incentives available to homeowners. The credit offers a 30% federal tax credit of the total cost of your solar panels.
This solar panels tax credit can equal thousands of dollars in savings on your solar panel installation. We often get a lot of questions on how you an expect to receive your credit and we aim to answer the basics here.
However, we are not tax professionals and strongly advise to contact your tax professional on your situation.
How will I receive my solar tax credit?
The credit reduces what you owe in federal income tax by 30% of your cost of solar panels. Home and business owners receive their credit against their federal tax liability. For example if you buy solar panels that total $35,000, your solar tax credit would be $10,500. If you owe more than $10,500 that year, we will apply your credit for that year.
If you owe less in federal taxes than your credit amount you are able to roll that balance over to the next year. The ITC is non-refundable so you will not receive a refund check for credits that are leftover. They apply the solar tax credit carryover there.
How does a solar tax credit carryover work?
In cases where your solar tax credit exceeds your federal tax liability, the remaining amount will carryover until you have used the full amount.
You are only able to claim your solar tax credit once. You must file your initial claim the same year you install your solar panels. Once you claim your credit, it will carryover every year until you apply the full balance.
In 2022, the government increased the federal solar tax credit to 30% of the total cost of solar panels until 2032. This means that your solar tax credit carryover will continue until 2032.
Each person’s taxes are different. Therefore, it is advisable to consult with a tax expert. They can provide guidance on how your federal solar tax credit carryover will be utilized.
Saving With Solar Tax Credits
If you are looking for more information on solar tax credits the IRS site is a great place to start. If you have more questions for your home then we are here to help. Dial (508)717-3820 to have us answer your questions or start your solar quote right away!
*Disclaimer – Isaksen Solar are not and do not employ tax professionals. You should consult your tax professional on your exact situation. We do not claim responsibility for your taxes or tax credits.*