Solar Tax Credit

Tax incentives make solar even more affordable. Federal government incentives knock as much as 30% off of the price of your total solar system, and the state of Idaho offers tax credits as well.

Note: The federal solar tax credit (ITC) will not be 30% after 2019. Act now to lock in your savings.

FAQ

How does the Solar Federal Tax Credit work?

How the solar tax credit works

The federal tax incentive allows for a 30% deduction (from your federal taxes) on an installed solar panel system. This is great news for homeowners and businesses that decide to invest in solar energy. Even if you don’t have enough tax liability to claim the entire credit in one year, you can “roll over” the remaining credits into future years for as long as the tax credit is in effect.

How do I claim the investment tax credit?

You claim the tax incentive for solar when you file your yearly federal tax return. Remember to let your tax professional know you’ve gone solar in the past year.

Here is how the federal tax incentive for solar will evolve over the coming years.

  • 2016 – 2019 — There is a 30% federal tax that can be claimed from the cost of your solar panel installation and system.
  • 2020 —New residential builds and commercial business owners can take a 26% deduction on their federal taxes.
  • 2021 — New residential builds and commercial businesses can receive a 22% deduction from their federal taxes.
  • 2022 – on — New commercial builds can deduct 10% from their federal tax bills, and a residential tax incentive will not be offered. Now is the time to invest if you are a Texas resident interested in solar energy for your home.

How much can you save with the Idaho Solar Tax Credit?

Of the state-level solar incentive programs, Idaho’s — called the Residential Alternative Energy Tax Deduction — is one of the strongest.

The first year after installing your home PV system, the Idaho solar tax credit allows you to deduct 40 percent of the cost of your photovoltaic power project when you file income taxes. Then, for the next three years, you’ll be eligible for a 20 percent state income tax deduction.

Each year, the maximum deduction is $5,000. So altogether, you can save up to $20,000 through the Idaho solar tax credit.

Can you still claim the Federal Solar Investment Tax Credit?

You absolutely can apply for both the federal and Idaho solar incentives — and you should. Together, these tax programs can cut your photovoltaic investment costs by 50 percent or more.

One important note — make sure to calculate tax credits on your net PV system cost. In other words, subtract other grants, rebates and installer or utility bonuses before figuring the amount of your claim. If you use the gross price, you could get a tax bill in the mail.