The Residential Clean Energy Credit, created in 2005 under the Energy Policy Act, was designed to support solar transformation. Households that went solar were eligible for a 30% credit on their taxes for the year solar was installed. Although the Inflation Act of 2022 extended the credit to 2032, it is now going away due to the approval of the Big Beautiful Bill, making now the best time to save.

Find out how you can cash in before it’s too late.

About the Federal Solar Tax Credit

The federal solar tax credit was created to make solar more affordable. Households could claim the 30% credit for the year they receive their PTO (permission to operate). So, if you receive a PTO for a solar system valued at $10,000 in 2025, you can claim a $3000 credit for that tax year.

The credit will reduce your tax liability. If it exceeds that amount, it would, hypothetically, roll over into the following year. However, rollovers are no longer an option because the credit is phasing out.

The bill, which was initially signed into law by George W. Bush in 2005 and extended by President Obama in 2008, and again by Trump in 2020 and finally by President Biden under 2022’s Inflation Reduction Act, was set to reduce to 26% in 2033 and 23% in 2034 before phasing out entirely. However, the solar credit will disappear due to Trump’s Big Beautiful Bill, meaning now is your last chance to save.

How to Get the Solar Tax Credit

While the news of the credit going away is unfortunate, residents must concentrate on the present and act quickly to take advantage of solar savings. Here are some things to keep in mind.

Eligibility

To receive the credit, you must own your solar panels. It is not available to people who lease or have a PPA.

Additionally, you must owe taxes. Previously, solar owners who did not owe taxes could have their credit roll over to the following year. However, this year is the only time to save since the credit will go away. Rollovers will not apply.

When to Claim

You can claim the credit for the year you receive your PTO from your utility company. So, if you installed your system in 2024, but did not receive your PTO until 2025, you would claim the credit for the 2025 tax year. It typically takes 2-3 weeks to receive your PTO, so keep that in mind when you plan your timeline.

What is Covered by the Tax Credit?

Your tax credit covers 30% of your system’s value. This includes:

·  The panels

·  Additional solar equipment like inverters, mounting, and wiring hardware

·  Batteries and other energy storage systems rated 3kW or more

·  Sales tax on eligible expenses

Credits do not cover roof repairs, tree trimming, or any home remodeling necessary to prepare for installation.

How to Claim the Credit

To claim the credit, you must:

·  Gather Supporting Documentation: Filing requires information from receipts, invoices, and your manufacturer’s certification. Ensure you have these on hand before starting the process.

·  Complete IRS Form 5695: Your accountant can ensure you fill out Form 5695 correctly. If you are doing your taxes yourself,  consult Energy Sage’s step-by-step guide to ensure they are correctly completed.

·  Add Schedule 3 to Form 1040: After completing Form 5695, you’ll need to use some of that information to fill out Schedule 3, which allows you to claim refundable and nonrefundable credits, like the ITC. Then you must fill out Form 1040, the principal form to file your tax return.

Other Ways to Save

Although the tax credit is going away, there are other ways to save. For example, consumers can take advantage of:

·  Tax Exemptions: Many states offer property tax exemptions for solar, meaning property tax won’t increase based on the value solar adds to your property. Some also provide tax-free installations.

·  Net Metering or Net Billing: Net metering and net billing also help you save. These plans allow you to sell unused clean energy to utility companies for a credit on your energy bill. Net metering provides credits at retail rates while net billing offers credits at wholesale rates.

·  Batteries: Although batteries are expensive, they help you utilize more of your produced energy, saving you money in the long run.

·  Tax Credits: Although the federal tax credit is going away, many states offer credits on the local level.

·  Rebates: Utility companies, local governments, and specialized programs may offer solar rebates, which can help reduce installation costs.

·  Community Solar: This option allows you to receive bill credits for your share of power generated from an off-site solar array.

Understanding the Timeline

With just a few months left, homeowners are advised to investigate their options sooner rather than later. Additionally, you should be aware that solar doesn’t happen overnight. Here’s the timeline involved:

·  Initial Consultation and Site Assessment: 1-2 weeks

·  System Design and Planning: 1-4 weeks

·  Permits and Documentation: 2-8 weeks

·  Panel Installation: 1-3 days

·  Final Inspection and Grid Connection: 1-4 weeks

All told, the process can take 3-4 months, so homeowners who want to go solar should act now.

Getting Started with Solar

To get started with solar, you must first contact solar providers. The right provider will handle everything, including permits, design, and equipment. However, it’s integral to work with a reputable company.

Here are a few things you should look for:

·  Reputation: Work with a provider backed by positive customer reviews and an extended community service history.

·  Equipment: The company should use top-of-the-line equipment that helps you get the most out of your investment.

·  Services: Choose a company that offers your required services, including consultation, design, permitting, and connection. Some companies even offer roofing and tree-trimming services, ensuring you’re solar-ready.

·  Cost: Many companies offer competitive pricing, but it’s best to work with a provider that offers the best value for your money.

Connect Through Solar America Today

Finding the right provider is the first step in going solar, and Solar America can help. Fill out our online form to receive a list of providers in the area. Choose the one best suited to your needs. Our competitive system ensures the lowest prices.

The clock is ticking on solar savings. Get in touch to get started today.  

FAQs

Is solar worth it in 2025?

Yes, solar is a worthwhile investment for homeowners due to the expiring tax credit, declining solar panel costs, and rising electricity prices.

How does the IRS verify solar credit?

Manufacturer certifications are like gold stars that show solar panels and components meet specific performance and quality standards. The IRS uses these certifications to verify your system is eligible for the tax credit.

How long does it take for solar panels to pay for themselves?

The time it takes to see profits from your solar installation varies depending on your energy use and the efficiency of your panels. However, in most instances, panels will pay for themselves in about ten years.