{"id":33169,"date":"2025-01-21T07:00:00","date_gmt":"2025-01-21T13:00:00","guid":{"rendered":"https:\/\/resource-center.hrblock.com\/?p=33169"},"modified":"2025-07-29T17:07:21","modified_gmt":"2025-07-29T22:07:21","slug":"smart-home-energy-savings","status":"publish","type":"post","link":"https:\/\/hrbcomlnp.hrblock.com\/tax-center\/lifestyle\/smart-home-energy-savings\/","title":{"rendered":"Conserve energy and your bank account with the solar tax credit"},"content":{"rendered":"\n<p><em><strong>Editor&#8217;s note: <\/strong>With the enactment of the One Big Beautiful Bill Act (OBBBA), there are changes for energy tax credits (solar credits). Find the latest details on our <\/em><a href=\"https:\/\/www.hrblock.com\/tax-center\/irs\/tax-law-and-policy\/one-big-beautiful-bill-taxes\/\"><em>OBBBA summary<\/em><\/a><em> page.<\/em><\/p>\n\n\n\n<p>Did you know solar tax credits for eligible solar PV (photovoltaic) energy system&nbsp;upgrades are available to taxpayers? To encourage people to use solar power and clean energy, the U.S. government offers a special federal income tax credit for residences with solar power. It\u2019s commonly called the \u201csolar ITC\u201d Learn more about the benefits of this federal tax credit and how to claim this residential clean energy credit on your taxes in this post.<\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"alignright size-full is-resized\"><img loading=\"lazy\" decoding=\"async\" width=\"500\" height=\"275\" src=\"https:\/\/hrbcomlnp.hrblock.com\/tax-center\/wp-content\/uploads\/2018\/01\/shutterstock_737425927.jpg\" alt=\"Solar energy tax credit - Solar energy panels on a roof. \" class=\"wp-image-57644\" style=\"width:240px\" srcset=\"https:\/\/hrbcomlnp.hrblock.com\/tax-center\/wp-content\/uploads\/2018\/01\/shutterstock_737425927.jpg 500w, https:\/\/hrbcomlnp.hrblock.com\/tax-center\/wp-content\/uploads\/2018\/01\/shutterstock_737425927-300x165.jpg 300w\" sizes=\"auto, (max-width: 500px) 100vw, 500px\" \/><\/figure><\/div>\n\n\n<h2 class=\"wp-block-heading\" id=\"h-federal-solar-tax-credit-benefits\"><strong>Federal solar tax credit benefits<\/strong><\/h2>\n\n\n\n<p>The Residential Clean Credit (formerly called the Residential Energy Efficient Property credit, or \u201cREEP&#8221;) may help lower your tax bill if you install solar roofing tiles or shingles. Aside from the environmental benefits of residential solar power \u2013 like reducing pollution, avoiding fossil fuels, and reducing your family\u2019s carbon footprint \u2013 solar energy also has a tax benefit.<\/p>\n\n\n\n<p>The downside is that it\u2019s expensive to install a solar panel. Thankfully, this federal solar tax credit can offset some of the expense.<\/p>\n\n\n\n<p>Generally, if you install renewable energy equipment on your property, you qualify for a percentage credit off the total cost of your solar system.<\/p>\n\n\n\n<div class=\"wp-block-create-block-hrb-single-override-cta\" class=\"wp-block-create-block-hrb-single-override-cta\" style=\"background-color:#005d1f\"><div class=\"hrb-single-override-cta--image\" style=\"background-image:url(&quot;https:\/\/www.hrblock.com\/tax-center\/wp-content\/themes\/hrb_tic\/img\/on-laptop-at-desk-graphic.png&quot;);background-size:contain;background-position:center;background-repeat:no-repeat\"><\/div><div class=\"hrb-single-override-cta--copy #ffffff\"><h3 class=\"main-heading\">File with H&amp;R Block to get your max refund<\/h3><div class=\"quick-links-list\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link wp-element-button\" href=\"https:\/\/www.hrblock.com\/online-tax-filing\/\">File online<\/a><\/div>\n\n\n\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link wp-element-button\" href=\"https:\/\/www.hrblock.com\/tax-offices\/?app_method=GENERAL_TAX_PREP_METHOD\">File with a tax pro<\/a><\/div>\n<\/div><\/div><\/div>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-how-does-the-solar-tax-credit-work\"><strong>How does the solar tax credit work?<\/strong><\/h2>\n\n\n\n<p>If you\u2019re wondering what the solar tax credit is and when you can use it, look no further. The credit amount is determined by the date you installed the equipment. <\/p>\n\n\n\n<p>Solar customers can claim:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>30% for solar energy systems placed in service in 2019<\/li>\n\n\n\n<li>26% for solar PV systems placed in service in 2020 and 2021<\/li>\n\n\n\n<li>30% for solar PV energy systems placed in service in 2022-2032<\/li>\n\n\n\n<li>26% for solar PV energy systems placed in service in 2033<\/li>\n\n\n\n<li>22% for systems placed in service in 2034<\/li>\n<\/ul>\n\n\n\n<p>*This federal tax credit as part of the REEP credit applies for tax years 2017 through 2034.<\/p>\n\n\n\n<p>If your solar tax credit was larger than income tax due, you can\u2019t use the residual money to get money back from the IRS.<\/p>\n\n\n\n<p>As a reminder, tax credits work like this: you can offset your overall taxable income by subtracting the amount from your tax liability. Learn more about <a href=\"https:\/\/www.hrblock.com\/tax-center\/filing\/credits\/\">tax credits<\/a>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-solar-energy-tax-credit-qualifications\"><strong>Solar energy tax credit qualifications<\/strong><\/h2>\n\n\n\n<p>Not all property qualifies for the federal solar tax credit. To be eligible, your property must be a cooperative apartment, condominium, house, houseboat, mobile home, or manufactured home approved by the Federal Manufactured Home Construction and Safety Standards.<\/p>\n\n\n\n<p>You must also have qualified solar equipment. Here is the list of qualified solar equipment and other property that is eligible for the REEP:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Qualified solar electric property that uses solar power to generate heated water or electricity<\/li>\n\n\n\n<li>Qualified geothermal heat pumps<\/li>\n\n\n\n<li>Qualified wind energy property or turbines that use wind to generate electricity for a dwelling unit<\/li>\n\n\n\n<li>Qualified fuel cell property<\/li>\n\n\n\n<li>Solar-electric collecting roofs and roof products<\/li>\n\n\n\n<li>Solar power storage equipment<\/li>\n\n\n\n<li>Solar installation (contractor labor costs)<\/li>\n\n\n\n<li>Qualified biomass fuel property<\/li>\n<\/ul>\n\n\n\n<p>*Please note, leased solar energy systems don\u2019t qualify for the solar tax credit.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-what-about-claiming-solar-panel-equipment-on-rental-property-you-own\"><strong>What about claiming solar panel equipment on rental property you own?<\/strong><\/h2>\n\n\n\n<p>While you can\u2019t claim the federal solar energy credit on rental properties you own and rent out for 80% or more of the year, you can claim it for properties you live in for part of the year. The percentage you claim is reduced based on the months you live there.<\/p>\n\n\n\n<p>For example, if you install qualifying solar equipment at a property you live in for half the year in 2024, you can deduct 50% of the 30% credit for the total cost of the solar equipment. So, if your solar system cost $20,000 in 2024, the full credit is $6,000, but you can only claim half of that \u2013 so the amount is $3,000.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-how-to-claim-the-solar-tax-credit-on-your-taxes\"><strong>How to claim the solar tax credit on your taxes<\/strong><\/h2>\n\n\n\n<p>Use Part 1 of Form 5695 to determine your credit amount. There are two parts on a Form 5695.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-part-1\">Part 1:<\/h3>\n\n\n\n<p>The first part of the form is for the REEP. Enter the amount you spent on qualifying solar energy materials or installation or other qualifying equipment. On line 14, you should enter your credit limit, which is determined by your tax liability. On line 15, follow the instructions to enter the credit amount on <a href=\"https:\/\/www.hrblock.com\/tax-center\/irs\/forms\/form-1040\/\">Form 1040<\/a>.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-part-2\">Part 2:<\/h3>\n\n\n\n<p>The second part of Form 5695 is for the nonbusiness energy property credit. This section is for the costs of heating and cooling-related home improvements you made to your property, such as new windows and insulation. Line 30 will be the number you add to your Form 1040. The maximum lifetime nonbusiness energy property credit is $500. Learn more about <a href=\"https:\/\/www.hrblock.com\/tax-center\/filing\/credits\/energy-efficient-tax-credits\/\">energy efficient tax credits<\/a>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Amending your return to claim a solar panel tax credit<\/h2>\n\n\n\n<p>If you didn\u2019t realize there were federal tax credit when installing solar energy property, and&nbsp;didn\u2019t claim the solar tax credit on a previous tax return, we have good news. You can&nbsp;<a href=\"https:\/\/www.hrblock.com\/tax-center\/filing\/how-to-amend-tax-return\/\">amend&nbsp;your return<\/a>&nbsp;(for up to three years) with the Internal Revenue Service (IRS) to claim this valuable residential energy credit. If the credit is more than your tax liability for that year, you &nbsp;can claim the solar tax credit balance for the following tax year.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Get help with the solar panel tax credit<\/h2>\n\n\n\n<p>Claiming credits can be complex, which is why we\u2019re here to help! Whether you&nbsp;<a href=\"https:\/\/www.hrblock.com\/tax-offices\/?app_method=GENERAL_TAX_PREP_METHOD\" target=\"_blank\" rel=\"noreferrer noopener\">make an appointment<\/a>&nbsp;with one of our knowledgeable tax pros or choose one of our&nbsp;<a href=\"https:\/\/www.hrblock.com\/online-tax-filing\/\" target=\"_blank\" rel=\"noreferrer noopener\">online tax filing<\/a>&nbsp;products, you can count on H&amp;R Block to navigate all your tax deductions and credits.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<p><\/p>\n\n\n\n<p><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Editor&#8217;s note: With the enactment of the One Big Beautiful Bill Act (OBBBA), there are changes for energy tax credits (solar credits). Find the latest details on our OBBBA summary page. Did you know solar tax credits for eligible solar PV (photovoltaic) energy system&nbsp;upgrades are available to taxpayers? To encourage people to use solar power [&hellip;]<\/p>\n","protected":false},"author":406,"featured_media":61647,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[26,4783,23342,23343,23349],"tags":[],"class_list":["post-33169","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-lifestyle","category-financial-education","category-life-stages","category-home","category-whats-new"],"acf":[],"yoast_head":"<title>Solar Tax Credit Details | H&amp;R Block<\/title>\n<meta name=\"description\" content=\"The federal solar tax credit is overlooked by many taxpayers. 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