The federal solar tax credit, also known as the investment tax credit (ITC), allows you to deduct 30 percent of the cost of installing a solar energy system from your federal taxes, for systems installed by December 31, 2019.
First placed into law through the Energy Policy Act of 2005, the rules were significantly changed in 2016 and renewed in 2018. Residential and commercial solar energy systems are subject to different credits in the future. For homeowners, the ITC will sunset in 2022, with scheduled reductions along the way. The ITC for residential solar energy systems is defined this way:
Maximum Solar Electric Tax Credit
- 30% for systems placed in service by 12/31/2019
- 26% for systems placed in service after 12/31/2019 and before 01/01/2021
- 22% for systems placed in service after 12/31/2020 and before 01/01/2022