What is the Solar Tax Credit?

If you’ve been researching the benefits of solar, you’ve probably heard of the solar tax credit. But what exactly is the solar tax credit, or more formally known as the Solar Investment Tax Credit (ITC)? This article will explain everything you need to know about tax credits for going solar in 2021 and onwards.


What is the ITC?

The solar ITC is a federal policy that promotes the use of solar energy. It is one of the most important policies that has accelerated the growth of solar energy. Since 2006, the U.S. solar industry has grown by more than 10,000%¹. A win-win for the economy and the earth.


How does it work?

The ITC allows solar system owners to deduct a certain percentage of the cost of their solar system from their personal income tax. In 2021, homeowners can receive up to a 26% tax credit for their solar system. However, this percentage has been decreasing and will be 0% by 2024. In the image below you can see the ITC schedule for the next few years.


How do I qualify?

To qualify for the ITC, you need to have a solar system installed on property that you own. The tax credit percentage you receive is based on the year your system’s construction takes place, and the amount is based on the cost of your system.

  • 26% for systems that begin construction in 2021 and 2022
  • 22% for systems that begin construction in 2023
  • 0% for residential systems, and 10% for commercial systems constructed after 2023


The ITC has been a success story for solar. Hundreds of new jobs were created, and literal tons of CO2 have been reduced from the atmosphere. It has been a great incentive for homeowners to take advantage of.


Photo Credit: stock.adobe.com

1. https://www.seia.org/initiatives/solar-investment-tax-credit-itc


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