The federal solar tax credit allows eligible solar adopters to claim as much as 30% of the entire cost of their system on their tax returns.
All taxpayers who own a new solar system or energy storage device which was put into service between 2017 and 2034 are eligible for the ITC for the year during which the system was originally installed. However, there are separate guidelines for homeowners, businesses, and community solar investors. The credit cannot be claimed by the property owner for leased systems or energy acquired through a Power Purchase Agreement (PPA).
Expenses which are not explicitly tied to the function of the system are not typically covered by the ITC.
Structural upgrades, traditional roofing, tree removal, and other home improvements don’t qualify. However, some projects may be covered under the Energy Efficient Home Improvement Credit, which can be claimed on the same tax form.
Costs related to system maintenance, monitoring services, panel cleaning, repairs and removal are outside the scope of the ITC.
The credit does not include costs to finance the system, such as loan origination fees or interest.
Illinois exempts property value added by a the addition of a solar system from property taxes in Public Act 100-0781, so there is no amount to credit against.
The ITC is a non-refundable credit, so it can only be used to reduce your taxable income. You cannot receive a refund if the amount of your solar tax credit is more than you owe in taxes. However, excess credit can be applied to future tax returns until the full amount has been reached.
If you’re a Sun Collectors customer, you have nothing to worry about. Our team will help you through the process to make sure everything is submitted correctly and on time. To claim the solar tax credit on your own, you need to file the appropriate IRS tax form. For homeowners, that’s Residential Energy Credits Form 5695, while businesses use Investment Credit Form 3468.
