Federal tax credits
A one-time federal investment tax credit (ITC) is available for residential and commercial solar photovoltaic (PV) systems. The credit is based on a percentage of the total solar PV system cost.
If the system is placed in service before Dec. 31, 2019, an ITC of 30% is available. After Jan. 1, 2020, the tax credit will start to decline. The residential tax credit is scheduled to end on Dec. 31, 2021. After Jan. 2022, the tax credit for commercial systems only will stay at 10%.
Federal Investment Tax Credit
| Placed in Service | Tax Credit Percentage |
| By 12/31/2019 | 30% |
| 1/1/2020 - 12/31/2020 | 26% |
| 1/1/2021 - 12/31/2021 | 22% |
| 1/1/2022 - | 10%* |
*Only for commercial systems, with no end date defined at this time.
Note: Property owners must have the tax liability to utilize the credit, but a portion of the credit may be carried forward if not completely usable in the installation tax year.
Other incentives
Depending on the local municipality or utility, there may be solar rebates or other types of incentives available. For more information, visit the Database of State Incentives for Renewables & Efficiency®.
Commercial tax depreciation
An income tax deduction exists for property that has a useful life of over one year and is used by the taxpayer in their business. Many renewable energy technologies including solar systems are eligible. See the IRS website on depreciation and contact a tax professional for more information.
Renewable energy certificates
Renewable energy certificates (RECs) are granted to renewable energy producers in certain states for every 1,000 kilowatt-hours (kWhs) their system contributes to the electric grid. Some utilities or renewable energy aggregators may compensate solar producers for their portion of Solar RECs that will be used to meet renewable portfolio standards. See the U.S. Department of Energy Green Power Market website for more information.
