Solar Investment Tax Credit FAQ

Solar Investment Tax Credit (ITC) FAQ

There’s good news for folks planning to go solar this year: the federal government has signed on to help make it more affordable! In 2020, new solar homeowners are eligible for an income tax credit, amounting to no more than 26% of the total cost of your new solar system. (If you went solar in 2019, your tax credit will be 30% the cost of your system.)

Since this is a credit, not a rebate, you will not get cash for going solar. Rather you just don’t have to pay that amount in taxes —it’s more of an “instant tax refund.”

How do I claim it?

  • You’ll need to fill out IRS form 5695
  • It’s a bit complicated, but the IRS has a detailed explanation of the form here

How much can I claim?

  • Solar owners are eligible to claim up to 26% of the total cost of their system, if completed in 2020. 30% if completed in 2019.
  • The amount you can claim is limited to your taxable income
  • If there are multiple earners in the household, the person with the larger income should file

What if I can’t claim my whole credit?

  • File for the remaining amount of the credit in the next tax year
  • You can write your credit off on your taxes until you’ve recouped 30% or 26% of the system cost or after claiming credits for up to five years after purchasing the system, whichever comes first. 

Is my battery eligible?

  • If your battery is charged by solar panels, that cost can be included in calculating the ITC

Is my heat pump eligible?

  • No, unfortunately, heat pumps are not eligible

Do I have to use the tax credits to pay down my loan?

  • Short answer, no. However, your loan payments will go up.

We encourage folks who are interested in solar to consult a tax advisor to maximize this incentive.

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