FEDERAL RESIDENTIAL CLEAN ENERGY CREDIT (25D)
Federal 25D rooftop solar tax credit
The 25D rooftop solar tax credit is available to federal taxpayers who purchase and install solar panels on their home.
View other eligible projects under this tax credit:
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Introduction
Introduction
Disclaimer: The information presented here is for educational purposes only. It is not intended to provide specific tax guidance. For questions regarding your individual tax situation, we suggest consulting with your tax advisor.
Tax Credit
30%
Available now
This incentive is available through the 25D Residential Clean Energy Property Credit, a US government program that covers 30% of qualifying costs of installing solar panels.
The 25D tax credit doesn’t just apply to solar panels. It also covers several other residential clean energy property upgrades, including geothermal heat pumps, solar water heaters and battery storage equipment.
Here’s a list of popular residential projects that qualify for the 25D tax credit:
Source: Internal Revenue Service
Unlike some federal tax credits, the 25D tax credit can be claimed year after year. For instance, if you use the 25D tax credit to install rooftop solar in 2024, you can apply for the same tax credit again in 2025 to cover another qualifying home project.
Tax credit limitations
The 25D rooftop solar tax credit will cover 30% of your solar project’s eligible costs. There’s no cap, or maximum dollar amount, for projects that are categorized under this tax credit.
Generally, you must subtract any price adjustments from the cost of the item. This can mean rebates, utility subsidies, financial incentives, and anything else that lowers the price point. This part can get a little tricky, so be sure to check the Frequently asked questions about energy efficient home improvements and residential clean energy property credits. for more information.
The 25D tax credit is “non-refundable,” which means that you can't get back more than you pay in federal income taxes.
If 30% of your project’s cost is $6,000, but you only owe $1,000 in federal income taxes that year, you would receive a $1,000 credit.
Who qualifies for the 25D rooftop solar tax credit?
This tax credit applies to everyone who pays federal income taxes.
No income requirements
There are no income limitations for the 25D Tax Credit. However, like nearly all federal tax credits, you must pay federal income taxes in order to qualify.
All US residents who live in their homes
The 25D rooftop solar tax credit can be applied to a new or existing home that is located in the United States. This means that unlike 25C tax credits, a home that is under construction when you apply for the rooftop solar tax credit can qualify.
Additionally, you must live in the property at least part of the year. Landlords can never claim this credit for homes they rent out but do not use as a residence themselves.
Which rooftop solar projects qualify?
This tax credit can be applied to eligible costs associated with purchasing and installing rooftop solar panels on your home.
To qualify for this tax credit, your solar panel purchase must be brand new and be installed between 2022 and 2032.
You can include labor costs associated with onsite preparation, assembly, or installation of your rooftop solar panels. Purchase and installation of piping and wiring required to connect new solar panels with your home may also qualify for this tax credit.
In general, traditional roofing materials and structural parts don’t qualify for this tax credit. These materials are excluded because they primarily serve a roofing or structural function, not an energy-generating function. However, some solar roofing tiles and shingles qualify for this credit because they generate solar energy and provide structural support.
If you aren’t sure which solar panel options qualify, talk to your contractor. They’ll help you select technology and associated equipment that can qualify for the 25D tax credit.
How to apply for the rooftop solar tax credit
Fill out IRS Tax Form 5695 and submit it with your federal tax return.
Document all expenses associated with the purchase, preparation, assembly, and installation of your solar panels. Save receipts and invoices or contact your contractor to obtain copies.
Fill out IRS Form 5695, Residential Energy Credits. For instructions on how to fill out the form, including more in-depth information about individual amounts you can claim, see the IRS’s Instructions for Form 5695.
Submit the form along with your annual tax return.
You may enjoy a lower tax bill or bigger refund!
Keep in mind that you can only apply for and claim the 25D tax credit for the year new solar panels are installed in your home. Here’s what we mean: if you purchase your equipment in late 2023 but don’t have it installed until 2024, you have to file the tax credit with your 2024 tax return.
Discover other incentives with the incentives calculator!
There are other incentives that you may qualify for, our incentive calculator will show you a personalized list of incentives.
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