Available Solar Incentives & Tax Credits
1
The Tax Credit
What is the Investment Tax Credit (ITC)?
The Investment Tax Credit (also called the federal solar tax credit) is a 30% credit on the entire cost of installing a solar energy system. The ITC applies to both residential and commercial systems, and there is no cap on its value.
⚠️ Important update: The 30% ITC for residential projects is set to expire at the end of 2025. Projects must be installed by December 31, 2025 to qualify.
How does the Tax Credit work?
As long as you own your solar energy system, you are eligible for the ITC.
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If your tax liability isn’t high enough to use the full credit in one year, you may be able roll over the remaining amount to future years—ask your tax preparer for advice on rolling over the credit.
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If you sign a lease or PPA, you don’t own the system, and you cannot claim the credit.
How do I claim the Investment Tax Credit?
You claim the ITC when filing your yearly federal tax return. Let your accountant know you installed solar, or if filing yourself, follow the IRS instructions here:
https://www.irs.gov/pub/
What is accelerated depreciation (businesses only)
Commercial customers can also take advantage of accelerated depreciation:
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In Year 1, you can depreciate 100% of the system cost minus 50% of the ITC.
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For example, in 2020 this meant you could depreciate 87% of the cost in the first year.
👉 Bottom line: Homeowners only have until December 31, 2025 to lock in the full 30% federal tax credit. After that, the residential ITC is scheduled to end.
2
Solar Renewable Energy Credits (SRECs)
As a solar energy producer you are entitled to earn and sell certificates representing this renewable energy production — these certificates are called SRECs. We can register your system to be eligible for earning SRECs using the SREC aggregator SREC Trade.
In SREC state markets, the Renewable Portfolio Standard (RPS) requires electricity suppliers to secure a portion of their electricity from solar generators. The SREC program provides a means for Solar Renewable Energy Certificates (SRECs) to be created for every megawatt-hour (1,000 kWh) of solar electricity created. The SREC is sold separately from the electricity and represents the “solar” aspect of the electricity that is produced. The value of an SREC is determined by the market subject to supply and demand constraints. SRECs can be sold to electricity suppliers needing to meet the solar RPS requirement. The market is typically capped by a fine or solar alternative compliance payment (SACP) paid by electricity suppliers for every SREC that falls short of the requirement.
SREC FACTS
- 1 SREC = 1 MWh of solar electricity
- A 10 kW facility generates around 12 SRECs annually
- SRECs are sold separately from the electricity
- Value is determined by market supply and demand mechanics
- Facilities must be certified by a state to sell SRECs