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April 2, 2024

The Solar Investment Tax Credit (ITC) has long been heralded as the cornerstone incentive for residential and commercial solar energy installation in the United States. Its significant impact on the affordability and accessibility of solar power can't be overstated. Now that it is 2024, it is crucial to understand how this tax credit works to reduce solar installation costs here in Arizona. 

Federal Solar Tax Credit Information 2024

Since 2006, the ITC has offered a financial reprieve to those looking to reduce their carbon footprint and electricity bills through solar energy. But there was a time when the solar industry at large did not know if the ITC was going to last! The 30% tax credit had entered a step-down period, where it dropped to 26% in 2020, before being extended and reinstated at 30% thanks to the Inflation Reduction Act of 2022. 

In 2024, the ITC offers a generous 30% credit for the installation costs of solar photovoltaic (PV) systems. 

This rate is locked in for systems installed between 2022 and 2032, underscoring the U.S. government's commitment to renewable energy and sustainability. The solar tax credit will drop to 26% in 2033 and 22% in 2034. Unless it is renewed again, this tax credit will expire in 2035.

Who Can Claim Solar Tax Credits?

Eligibility for the solar tax credit is for residential homeowners and commercial entities. To qualify, one must: 

  • Own the solar PV system (either directly or through a financed purchase)

  • Have the system installed on the property they own

  • Have enough taxable income

What Costs Are Covered?

The ITC covers a comprehensive range of expenses related to the installation of solar PV systems. This includes the cost of the solar panels themselves, labor for on-site preparation, assembly, and installation, and the integration of the solar system into the existing electrical grid.

Are Solar Batteries Eligible for the Solar Tax Credit?

Yes, you can include solar battery costs as you calculate your total solar installation costs. Energy storage devices with a capacity of 3 kWh or more are also eligible.

Claiming the Solar Tax Credit

Claiming the ITC is straightforward — homeowners will need to save all related receipts and complete IRS Form 5695, while businesses should fill out IRS Form 3468. These forms are then submitted with your standard IRS Form 1040. It’s always advisable to consult with a tax professional to ensure compliance and maximize your benefit.

Energy Solution Providers: Your Partner in Solar Adoption

At Energy Solution Providers, we're more than just a solar company. We're your partner in navigating the transition to solar energy. With over 20 years of experience and thousands of successful installations across Arizona, we're poised to help you make the most of the federal solar tax credit. From the initial consultation to the final installation, we ensure a seamless process and maximum savings.

Maximize Your Solar Tax Benefits

The Solar Investment Tax Credit stands as a testament to the U.S. government's support for renewable energy and its benefits for the American people. Don’t miss out on the opportunity to reduce your environmental impact and save on energy costs. The 30% solar tax credit offers a prime opportunity to invest in solar energy. 

Call Energy Solution Providers at 520-868-0700 today to explore your options and get started on your solar journey.