When Can You Still Claim the Solar Tax Credit?

The federal solar tax credit — formally the Residential Clean Energy Credit — covers 30% of the cost of a qualifying home solar installation, but only for systems placed in service between 2022 and December 31, 2025.¹ You claim it by filing IRS Form 5695 with your federal return for the year the system became operational. A system that started generating power in 2025 goes on your 2025 return, which most people file in early 2026. Systems placed in service after December 31, 2025 do not qualify, though unused credit from an eligible installation can still be carried forward to reduce later tax bills.

The 2025 Deadline Turns on the “Placed in Service” Date

The tax year you claim the credit is the year your system was placed in service. That is an IRS term, and it means the equipment is installed, operational, and ready to generate electricity for your home.² Paying a deposit, signing a contract, or taking delivery of panels does not count. The system has to actually be capable of producing power.

That distinction matters at the deadline. Panels mounted in December 2025 but not connected to the grid or inspected until January 2026 would generally fall into 2026 and miss the credit. For a solar system installed while a new home is under construction, the placed-in-service date is typically the year you moved in, because the system needs an occupant to be considered in use. For existing homes, it is simply the date installation was completed and the system began functioning.

If your system qualified during the 2022–2025 window and you did not claim the credit on the correct year’s return, you can file an amended return to capture it.

Who Can Claim It

The credit goes to the person who bought and owns the solar equipment, installed on their main residence.¹ Both homeowners and renters can claim it if they paid for the property. A solar loan still counts as ownership because you hold title to the equipment.

Leased systems and Power Purchase Agreements do not qualify the resident. In those arrangements, a third-party company owns the panels and you pay for the electricity, so any tax benefits belong to that company. Landlords who do not live in the home are also excluded, and property used entirely for business does not qualify. There is no income limit and no dollar cap on the credit itself.¹

The home has to be in the United States. Houses, condominiums, apartments, and manufactured homes all qualify, and the property can be a primary residence or a second home you actually occupy. Rentals you do not live in do not count.

What Costs Count

Qualified expenses include the panels, inverters, mounting hardware, wiring, labor for onsite preparation and installation, sales tax on the equipment, and permitting fees. Solar roofing tiles and solar shingles qualify because they generate electricity. Traditional roofing materials do not, even when installed to support panels — roof trusses and standard shingles serve a roofing function rather than an energy-generation one.¹

The same 30% credit also applies to other clean energy property placed in service by the deadline, including solar water heating systems, battery storage with capacity of at least 3 kilowatt-hours (with or without solar panels), small wind turbines, geothermal heat pumps, and fuel cell property.³ Fuel cells carry a separate limit of $500 per half kilowatt of capacity.¹

How Rebates and Incentives Affect the Math

Some incentives reduce your qualified expenses before you multiply by 30%. A utility subsidy for buying or installing clean energy property has to be subtracted from your costs.¹ The same goes for a rebate that meets all three of these conditions: it is based on the cost of the property, it comes from someone connected to the sale (manufacturer, distributor, or installer), and it is not payment for services you provided.

Net metering credits — what your utility pays you for excess electricity you send back to the grid — do not reduce your qualified expenses. Those are treated as income from selling energy, not a discount on installation.¹

State tax credits follow a different rule. If a state incentive is reportable as taxable income on your federal return, it generally does not reduce your basis for the federal credit. If it is not federally taxable, your qualified costs may need to be reduced first. State programs vary widely, so a tax professional can help you place a specific rebate in the right category.

Filing: Form 5695 and Schedule 3

You claim the credit by completing Part I of Form 5695 (Residential Energy Credits) and filing it with your return for the year the system was placed in service.² The steps:

Add up your qualified solar costs, including panels, inverters, mounting hardware, wiring, installation labor, sales tax on the equipment, and permitting fees.
Report the total on Line 1 of Part I of Form 5695.³
The form walks you through multiplying by 30% to reach the tentative credit.³
Move the final credit amount from Form 5695, Line 15, to Line 5a of Schedule 3 (Form 1040), which feeds your main return.⁴⁵

A $20,000 system produces a $6,000 credit. You can file electronically or by mail. The IRS does not ask you to attach receipts, invoices, the installer’s contract, or manufacturer certifications, but keep them in your records in case your return is audited.

The Credit Is Non-Refundable, and Unused Amounts Carry Forward

The credit is non-refundable. It can reduce your federal income tax to zero, but it cannot generate a refund past that.¹ If your credit is $6,000 and you owe $4,000 in federal income tax, you pay nothing that year and have $2,000 in unused credit.

That $2,000 is not lost. You carry it forward to the next year, and the year after that if needed, until it is used up.¹ The IRS has not published a specific expiration date for carry-forward amounts, so a low-tax year does not force you to give up the balance. You report the unused amount on Form 5695 in the following tax year. Carry-forward credits from an eligible pre-2026 installation remain available to offset your tax bill in 2026 and beyond, even though the credit itself is no longer available for new installations.

Because the credit is non-refundable, its real value depends on how much federal income tax you actually owe. If your liability is consistently near zero, the credit may take several years to work through.

If You Use Part of the Home for Business

Business use of the home can shrink the credit. The threshold is 20%. If 20% or less of the home is used for business, you claim the full credit. If business use is more than 20%, you can only claim the credit on the residential share of the expenses.⁶ For a home with 30% business use and a $25,000 system, the credit is calculated on 70% of the cost, or $17,500, giving a credit of $5,250 rather than $7,500. A property used entirely for business does not qualify at all.¹

1
Internal Revenue Service. Residential Clean Energy Credit
2
Internal Revenue Service. How to Claim a Residential Clean Energy Tax Credit
3
Internal Revenue Service. Instructions for Form 5695
4
Internal Revenue Service. Form 5695 – Residential Energy Credits
5
Internal Revenue Service. Schedule 3 (Form 1040)
6
Office of the Law Revision Counsel. 26 U.S. Code 25D – Residential Clean Energy Credit