What Homeowners Need to Know about Solar Tax Credits in 2025
- The 2025 solar tax credit covers 30% of system costs (panels, labor, batteries).
- Deadline: Install by Dec 31, 2025 to qualify.
- Use IRS Form 5695 to claim the credit.
âď¸ Want to slash your tax bill while going solar? The 2025 Federal Solar Tax Credit (officially the Investment Tax Credit, or ITC) lets homeowners claim up to 30% back on solar panel costs. Hereâs how to qualify, claim it, and maximize savings.
What Is the Solar Tax Credit in 2025?
The ITC is a dollar-for-dollar reduction on your federal taxes for installing solar panels. For 2025:
- â  30% credit for systems installed by December 31, 2025 (unless Congress changes it).
- â Covers solar panels, labor, batteries (if paired with solar), and more.
Not sure if solar is right for you? Check our Solar Panels for Beginners Guide.
Who Qualifies?
Youâre eligible if you:
- Own your home (primary or secondary residence).
- Install solar between January 1 â December 31, 2025.
- Buy the system (leases/PPAs donât qualify).
Renters or landlords? The credit only applies to homeowners.
What Costs Are Covered?
| â Covered | â Not Covered |
|---|---|
| Solar panels & inverters | Landscaping |
| Installation labor | Roof repairs |
| Solar batteries (with PV) | Standalone generators |
Need help choosing a system? Compare Grid-Tied vs. Off-Grid Solar.
How to Claim the Credit (3 Steps)
- Save receipts and manufacturer certification.
- Fill out IRS Form 5695Â when filing taxes.
- Reduce your tax bill by 30% of system costs.
Step-by-Step: Claiming Your Solar Tax Credit
- Save Documentation
- Keep receipts for panels, inverters, batteries, and installation labor.
- Ask your installer for a certification statement (proving eligibility).
- Fill Out IRS Form 5695
- Download the latest form:Â IRS Form 5695 (2025).
- Enter your total system costs on Line 1.
- Apply the Credit to Your Taxes
- Subtract 30% of system costs from your federal tax liability.
- Example:Â A $20,000 system =Â $6,000 credit.
- Carry Over Unused Credits
- If your credit exceeds your tax bill, roll the remainder to next year.
đ Pro Tip: Use the IRS Solar Credit Calculator to estimate savings.
â ď¸ Pro Tip: If your credit exceeds your tax liability, roll the remainder to next year!
đ Real-World Example: How Much Can You Save?
- System Cost: $25,000
- Tax Credit (30%): $7,500
- State Rebate (e.g., NY): +$5,000
- Net Cost: $12,500 (50% off!)
Calculator: Energy.gov’s Solar Savings Tool
FAQs
Can I claim the credit if I install solar in 2025 but file taxes in 2026?
Does the solar tax credit expire after 2025?
Can I combine federal and state incentives?
Extra Ways to Save
- Check DSIRE for state/local rebates.
- Pair solar with wind/biogas (see Renewable Energy Comparison).
Bottom Line
The 2025 Solar Tax Credit is a huge opportunity to cut costs. Act now before potential policy changes!
đ Explore More: DIY Home Energy Independence Guide
