Solar Tax Credit and Rebate Calculator — Federal ITC + State Incentives

Most homeowners claim only one incentive and leave thousands behind

The 30% federal tax credit gets all the headlines — and it deserves them. On a typical $17,430 system it saves you $5,229 instantly. But that's just the beginning. Many states offer additional 15–25% credits on top. Utilities add cash rebates. SREC programs pay you ongoing income for 10+ years. Property tax exemptions protect your home value increase from being taxed.

Stack all available incentives and some homeowners in New York or Massachusetts effectively pay 50–60 cents on the dollar for their solar system. This guide shows you every incentive, who qualifies, and exactly how to claim them.

What's in this guide

The 30% Federal Tax Credit Explained
How Much Will You Save?
How to Claim the ITC
Best State Solar Tax Credits
Utility Rebates & SREC Programs
How to Stack All Incentives
Does Battery Storage Qualify?
Tax Credit Questions Answered

The 30% Federal Solar Tax Credit Explained The Big One

The federal Investment Tax Credit (ITC) lets you deduct 30% of your total solar system cost directly from your federal income tax bill. It's not a deduction — it's a dollar-for-dollar credit, which makes it far more valuable.

Federal

Investment Tax Credit (ITC)

30%

Available to all US homeowners who own (not lease) their solar system. Applies to full installed cost including equipment, labor, and battery storage.

Available Until

ITC Schedule

2032

30% through 2032 → 26% in 2033 → 22% in 2034 → 0% for residential in 2035 unless Congress extends it.

Applies To

What Qualifies

Everything

Solar panels, inverters, mounting hardware, wiring, labor, permitting fees, battery storage, and even sales tax on equipment.

Requirements

Who Qualifies

Most owners

You must own the system (not lease), have sufficient federal tax liability, and install at your primary or secondary US residence.

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Lease customers do NOT get the tax credit

If you sign a solar lease or PPA, the installer owns the panels and claims the 30% ITC — not you. This is one of the biggest reasons owning (via cash or loan) beats leasing. See our Financing Calculator to compare loan vs lease total savings.

How Much Will You Save? Real Numbers

Here's exactly how the 30% ITC works on a typical US solar installation:

Federal ITC Calculation — Typical 6kW System

Based on US national average pricing (2026)

Gross system cost (panels + labor + permits)$17,430

30% federal ITC credit− $5,229

Net cost after federal ITC$12,201

Additional NY state credit (25%, up to $5,000)− $4,308

Net cost after all incentives (NY example)$7,893

$5,229 Average ITC credit on a 6kW system at national average price

$7,050 Average ITC credit on an 8kW system (larger homes)

$8,850 Average ITC credit on a 10kW system with battery storage

To get your exact credit amount based on your home size and state, use our Global Solar Calculator which automatically applies your country and state incentives.

How to Claim the Solar Tax Credit Step by Step

Claiming the ITC is simpler than most people think — it's just one IRS form filed with your regular tax return:

Install your solar system in the tax year

The credit applies to the year your system is installed and operational — not when you signed the contract or made a deposit.

Keep all receipts and invoices

Save your installer's final invoice, any equipment receipts, and permit documentation. You need these to calculate the credit amount.

Complete IRS Form 5695

"Residential Energy Credits" — this is where you calculate your 30% credit. It takes about 10 minutes and most tax software (TurboTax, H&R Block) does it automatically.

Apply credit to your tax bill

The credit reduces your federal tax liability dollar-for-dollar. If your credit exceeds your tax bill this year, you can carry the remainder forward to future tax years.

Use your refund to pay down your solar loan

If you financed with a solar loan, apply your tax refund directly to the loan principal. This reduces your balance by $5,000+ and cuts your monthly payments — see our Financing Calculator for the exact impact.

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What if my credit is bigger than my tax bill?

Unlike some credits, the ITC can be carried forward. If your $5,229 credit exceeds what you owe in federal taxes this year, the remaining amount rolls over to next year's return. You won't lose it — it just takes longer to fully benefit.

Best State Solar Tax Credits Stack These Too

These states offer additional tax credits that stack directly on top of the 30% federal ITC:

State Solar Tax Credits & Incentives (Beyond Federal ITC)

State	Incentive	Value	Cap	Stacks with ITC?
New York	25% State Tax Credit	25% of cost	$5,000	Yes
Massachusetts	15% State Tax Credit	15% of cost	$1,000	Yes
South Carolina	25% State Tax Credit	25% of cost	$3,500	Yes
Arizona	25% State Tax Credit	25% of cost	$1,000	Yes
Maryland	State Grant	$1,000 flat	$1,000	Yes
Montana	State Tax Credit	Up to $500	$500	Yes
Hawaii	35% State Tax Credit	35% of cost	$5,000	Yes
Oregon	Residential Energy Tax Credit	Varies	$1,500	Yes

Check our Solar Cost by State guide for the complete incentive breakdown for your state.

Utility Rebates & SREC Programs Ongoing Income

Utility Cash Rebates

Many local utilities offer upfront cash rebates when you install solar — typically $500–$2,500. These are separate from tax credits and don't affect your ITC calculation. Check your utility's website or call their renewable energy department to ask about current rebate programs.

SREC Programs — Earn Money Every Year

Solar Renewable Energy Certificate (SREC) programs pay you for every megawatt-hour (MWh) your panels generate — on top of your electricity savings. States with active SREC markets include:

New Jersey: TRECs pay around $90–$100/MWh. A 6kW system generating 7.2 MWh/year earns $650–$720 annually.
Illinois: Illinois Shines pays $75–$100/MWh for 15 years upfront. A 6kW system could earn $8,000–$10,800 total.
Maryland: SRECs trade at $60–$80/MWh — roughly $430–$576/year for a 6kW system.
Massachusetts: SMART program pays a fixed rate per kWh for 10 years — typically adding $1,500–$2,500 in total income.

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SREC income can cut your payback by 1–3 years

In states like New Jersey and Illinois, SREC income stacks on top of electricity savings and dramatically shortens your payback period. Use our Payback Calculator to factor in SREC income for your state.

How to Stack All Incentives for Maximum Savings Pro Strategy

Here's the full incentive stack for a New York homeowner with a $18,660 (6kW) system — the best-case example in the US:

Maximum Incentive Stack — New York Example

$18,660 gross system cost (6kW, NY average)

Gross system cost$18,660

30% Federal ITC− $5,598

NY 25% State Tax Credit (capped at $5,000)− $5,000

NY-Sun Megawatt Block incentive− $1,200

Net cost after all incentives$6,862

Total incentives received$11,798 (63% off!)

That's a $18,660 system for just $6,862 — with electricity savings and SREC income on top. This is why New York has one of the best solar ROIs despite having the highest install price. Check your full ROI with our ROI Calculator.

Does Battery Storage Qualify for the Tax Credit? Yes!

Yes — since the Inflation Reduction Act (2022), standalone battery storage systems qualify for the 30% federal ITC even if installed separately from solar panels. Previously, batteries only qualified if installed at the same time as solar.

Batteries installed with solar: The full battery cost (including installation) qualifies for the 30% ITC.
Standalone batteries (no solar): Also qualify at 30% since 2023. Must have a minimum capacity of 3 kWh.
Popular qualifying systems: Tesla Powerwall ($10,000–$12,000), Enphase IQ Battery, LG RESU, sonnen eco.
Average battery ITC savings: $3,000–$4,500 on a single Powerwall installation.

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Adding a battery? The math often works

A $10,000 Tesla Powerwall costs $7,000 after the 30% ITC. In states with time-of-use electricity rates, a battery can save $600–$1,200/year — giving you a 6–12 year payback on the battery itself. Use our Cost Calculator to see how battery storage affects your total system cost.

Solar Tax Credit Questions Answered FAQ

What is the 30% solar tax credit?

The 30% federal Investment Tax Credit (ITC) lets you deduct 30% of your full solar system cost — including equipment, installation, and battery storage — directly from your federal income tax bill. On a $17,430 system, that's a $5,229 tax credit. It's available to all US homeowners who own (not lease) their system, and runs through 2032 at 30%.

How do I claim the solar tax credit?

File IRS Form 5695 (Residential Energy Credits) with your federal tax return for the year your system was installed. Most tax software handles this automatically. Enter your total system cost, calculate 30%, and the credit is applied to reduce your tax bill. If the credit exceeds your tax liability, the remainder carries forward to future years.

Can I get the solar tax credit if I lease my panels?

No. With a solar lease or PPA, the installer owns the panels and claims the 30% ITC — not you. This is one of the most significant financial disadvantages of leasing. To get the tax credit, you must own the system through a cash purchase or solar loan. See our Financing Calculator to compare loan vs lease total savings.

What if my tax credit is more than I owe in taxes?

The ITC can be carried forward to future tax years. For example, if you owe $3,000 in taxes but have a $5,229 credit, you use $3,000 this year and carry $2,229 forward to next year's return. You won't lose the credit — it just takes multiple years to fully utilize. Note: the ITC is not refundable, meaning you won't receive cash back if you have zero tax liability.

Does the solar tax credit affect my state taxes?

The 30% ITC applies only to federal taxes. However, many states have their own separate solar tax credits that apply to state income taxes. New York offers a 25% state credit (up to $5,000), Hawaii offers 35%, and South Carolina offers 25%. These are applied separately on your state tax return — they stack on top of the federal credit.

Is the solar tax credit going away?

The ITC is currently guaranteed at 30% through 2032 under the Inflation Reduction Act. It drops to 26% in 2033 and 22% in 2034, then expires for residential installations in 2035 (unless Congress extends it again). There's no need to rush — but waiting until 2033 costs you 4% of your system cost in lost credit.

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