Federal Solar Tax Credit
One of the best incentives most people can get to reduce the cost of installing solar is the Federal Solar Tax Credit, also known as the Renewable Energy Investment Tax Credit (ITC). This nonrefundable tax credit covers up to 30% of the purchase and installation costs for a rooftop solar project on your home and is available now through 2032.
In addition to rooftop solar, this tax credit is available for:
- solar water heating,
- fuel cells,
- small wind energy,
- and geothermal heat pumps.
- Starting in 2023, energy storage (batteries) are also included in this tax credit, whether they are charged by renewable energy or by the grid.
There is no dollar amount cap amount on the ITC; you’re eligible to the 30% tax break whether you spend $10,000 or 100,000. However, it is important to note that the amount of credit you are eligible for is tied to your tax liability. We’ve said it before and we’ll say it again, talk to a tax expert.
Qualifying for the Federal Solar Tax Credit
- The solar PV system is located at a residence of yours in the United States.
- You own the solar PV system (i.e., you purchased it with cash or through financing but you are neither leasing the system nor nor paying a solar company to purchase the electricity generated by the system).
- The solar PV system is new or being used for the first time. The credit can only be claimed on the “original installation” of the solar equipment.
How to Apply For the Federal Solar Tax Credit
After seeking professional tax advice and ensuring you are eligible for the credit, you must complete and attach IRS Form 5695 to your federal tax return (Form 1040 or Form 1040NR).,./
Utah Solar Tax Credit for Homes
Local incentives for local people! The Utah solar tax credit, officially known as the Renewable Energy Systems Tax Credit, covers up to 25% of the purchase and installation costs for residential solar PV projects, capped at $1,600, whichever is less. Learn more and apply here.
The Utah residential solar tax credit is also phasing down. The cap dollar amount you can receive begins to phase down as follows:
- 25% capped at $1,200 until 12/31/21
- 25% capped at $800 until 12/31/22
- 25% capped at $400 until 12/31/23
- Utah tax credit expires in 2024
How to apply for the Utah Solar Tax Credit
The Utah Office of Energy Development processes the Utah Solar Tax Credit applications. You will need to register and apply through their website.
Utility Incentives and Rebates
Alas, Utah’s utilities no longer provide rooftop solar incentives. If you cannot own solar panels but want to invest in cleaner energy, check out opportunities for purchasing clean energy shares through your utility or municipality.
Rocky Mountain Power provides a battery rebate incentive program called Rocky Mountain Power Wattsmart Battery Program. This program provides a rebate per kW of battery capacity and an ongoing annual credit. Specific rates and battery eligibility are available here.
GRANT PROGRAMS
There are new federal grant programs as well as smaller grant programs that can be used to cover some of the balance of costs of a solar system after available tax credits and incentives have been realized. Many of these are not yet fully developed but will prioritize low-income and disadvantaged communities. For example, the Utah Office of Energy Development applied for a federal Solar for All grant to provide solar resources to residents of low-income and disadvantaged communities. Details about this will be forthcoming in summer 2024.
Grant Programs
There are new federal grant programs as well as smaller grant programs that can be used to cover some of teh balance of costs of a solar system after available tax credits and incentives have been realized. Many of these are not yet fully developed but will prioritize low-income and disadvantaged communities. For example, the Utah Office of Energy Development applied for a Solar for All grant to provide solar resources to residents of low-income and disadvantaged communities. Details about this will be forthcoming in summer 2024.
Other Solar Options for Residential Customers
Owning your own solar panels is only one of many ways to take advantage of clean, affordable electricity from the sun. Other options include:
Subscriber Solar: This is not currently available from Rocky Mountain Power but may be available at other Utah utilities and will likely be available as part of Community Solar projects developed through Solar for All in the next few years.
- Utah Renewable Communities Program: 18 communities in Utah have committed to 100% renewable electricity by 2030. Residents in these communities will automatically be enrolled in 100% renewable electricity by 2030 unless they choose to opt out (https://www.utahrenewablecommunities.org/).
- Lease-to-own Solar: There may be options, especially through Solar for All, where a residential customer can have a solar system installed and owned initially by a third-party who can take advantage of tax credits. Then, after five years, ownership would transfer to the residential homeowner. Details of such a plan are still being developed.
There are new federal grant programs as well as smaller grant programs that can be used to cover some of teh balance of costs of a solar system after available tax credits and incentives have been realized. Many of these are not yet fully developed but will prioritize low-income and disadvantaged communities. For example, the Utah Office of Energy Development applied for a Solar for All grant to provide solar resources to residents of low-income and disadvantaged communities. Details about this will be forthcoming in summer 2024.