Federal Solar Tax Credit 2026: How the 30% ITC Works
The federal solar tax credit — officially the Residential Clean Energy Credit (IRC Section 25D) — lets you deduct 30% of the cost of a solar PV system, battery storage, and related installation from your federal taxes. It’s one of the most valuable incentives for homeowners going electric.
What the 30% Credit Covers
- Solar panels and mounting hardware
- Battery storage of any capacity (a rule change that now includes small batteries)
- Inverter and wiring
- Labor, permits, and inspection fees
- Sales tax on the equipment (in many states)
Key Rules
- Percentage: 30% through 2032, then scheduled to step down (check current year terms before filing).
- It’s a credit, not a deduction: It directly reduces taxes owed, dollar for dollar.
- No income cap: Any taxpaying homeowner can claim it.
- New equipment only: Used panels generally don’t qualify.
How to Claim It
File IRS Form 5695 with your federal return for the year the system is placed in service. Keep your invoices and the installer’s certification.
Stacking With State Rebates
Many states and utilities add their own incentives on top. Pairing solar with a home battery maximizes both savings and resilience. For the panels themselves, see our best solar panels guide.
FAQ
Can I claim it if I don’t owe much tax?
The credit is non-refundable, but you can carry forward unused amounts to future years.
Does it cover battery storage?
Yes — standalone batteries of any size now qualify, not just those paired with solar at install.
Do I need to itemize?
No. The clean energy credit is claimed separately from the standard/itemized deduction choice.
From our home energy & electrification guide.
