Many consumers make the decision to purchase and install solar on their home so they can take advantage of the solar tax credit, officially known as the Investment Tax Credit (ITC). This tax credit is available to those who purchase their solar, which makes buying a system more affordable. Solar systems installed during the year 2023 will receive a dollar-for-dollar tax deduction equivalent to 30% of the cost of the system.
Example: The tax credit at 30% on a $20,000 system is $5,200, which makes the net cost only $14,800. Once installed, the net cost will continue to be reduced by the amount you save each month on electricity bills.
Take the following steps to claim your tax credit:
- Make sure you have enough tax liability to claim against your taxes, referencing Section 48 of the Internal Revenue Code, the ITC can be carried back one year and forward 20 years. So, if you had a tax liability last year and not this year, you can still claim your credit under this rule.
- Complete IRS Form 5695.
- Include your ITC information to your Form 1040.
*Meet with your Tax Advisor to validate based on your personal situation.
