4 Steps to Claim Solar Tax Credit for Solar Installation

As more homeowners transition to solar energy to power their homes, the Solar Tax Credit offers a significant opportunity to reduce the upfront costs of solar system installation. The solar tax credit allows you to deduct up to 30% of the cost of installing a residential solar panel system from your federal taxes.

But how do you claim this valuable credit? Here are the four easy steps to guide you through the process.

Step 1: Confirm Your Eligibility for the Solar Tax Credit

The first step is to confirm that your solar installation is eligible for the ITC. To qualify, the solar system must be installed on a U.S. property that you own. This can include a house, houseboat, mobile home or manufactured home.

In addition, you must own the solar system. If you’ve opted for a solar leasing arrangement or Power Purchase Agreement (PPA), you won’t be eligible for the solar tax credit.

Step 2: Gather the Necessary Solar Documentation

Once you’ve confirmed eligibility, the next step is to gather the required documentation. The IRS will need proof of a total cost of your solar system installation. This will typically be your solar contract, provided by the solar company.

Step 3: Complete IRS Form 5695

To claim the solar tax credit, you must fill out IRS Form 5695. This form helps you calculate the total amount of credit you are eligible for based on your solar system installation cost. In 2025, you can claim up to 30% of the total installation cost.

Step 4: File Your Tax Return and Claim the Credit

Once Form 5695 is completed, submit it along with your Form 1040 when you file your taxes. The solar tax credit will reduce your overall tax liability, potentially lowering the amount you owe or increasing your refund.

If the tax credit exceeds your liability, the unused portion can be carried forward for up to given years. This means you can continue to benefit from the credit, even if you don’t use the full amount in the current tax year.

Conclusion

Claiming the solar tax credit is a great way to lower the cost of your solar system installation and start saving with your solar energy. By following the four steps indicated above, you can reduce your upfront costs and enjoy long-term solar savings.

If you’re ready to take advantage of the ITC and explore how solar energy can benefit your home, Pinnacle Exteriors would be happy to help you! You can call us at (484) 350-6829 to schedule a FREE assessment.