Incentives and Tax Credits for Solar Systems
Opting for solar energy can be a financially rewarding decision, thanks in part to various incentives and tax credits designed to make solar more accessible. This guide from Your Home Solar will provide an overview of the federal solar tax credit, touch on local incentives, and explain how to apply for these benefits.
Overview of Federal Solar Tax Credit
The federal solar tax credit, also called the Investment Tax Credit, has been one of the biggest financial incentives for going solar in the United States. It lets homeowners reduce their federal taxes by taking a credit based on the cost of their solar system.
Right now, the credit is set at 30 percent. For every dollar spent on a solar system, you get thirty cents back as a credit on your federal income taxes. There’s no cap, and it works for both residential and commercial projects, which is why it has helped so many people make the jump to solar.
This benefit is coming to an end. Starting January 1, 2026, the federal government will no longer offer this credit. To qualify for the full 30 percent, a system must be purchased and fully installed by December 31, 2025. After that date, the credit is no longer available.
Local and State Incentives for Solar
Determine Eligibility
The cost of solar panels primarily depends on their efficiency and longevity. Higher-quality panels may come with a higher price tag, but they can produce more electricity and potentially last longer.
Gather Required Information
Complete IRS Form 5695
Fill out IRS Form 5695, “Residential Energy Credits,” when preparing your federal tax return. You’ll input your solar energy system’s costs in this form to calculate your credit amount. This is no longer valid beginning on January 1st, 2026.
If you’re unsure about this process, it’s recommended to consult with a tax professional to ensure all steps are accurately completed.
Local and State Incentives for Solar
While Tennessee does not currently offer statewide incentives for solar installations, it’s possible that local utility companies provide programs or incentives to encourage their customers to go solar.
These incentives can vary by utility company and could include rebates, performance payments, or discounts. However, homeowners are advised to check with their specific utility company or contact us at Your Home Solar to investigate potential local incentives for you.
Remember, investing in a solar system is one of the few home improvements that can pay you back over the period of ownership. It’s a fantastic way to increase your property value, save on energy bills, and contribute to a sustainable future.
At Your Home Solar, we’re committed to helping East Tennessee homeowners understand and navigate the financial aspects of solar installation. If you have more questions about solar incentives or wish to schedule a free inspection and estimate, don’t hesitate to reach out to us. Let’s work together for a greener, more sustainable future.
Empower Your Home with Solar Energy in East Tennessee!
Your Home Solar offers an incredible opportunity to empower your home with clean, renewable solar energy. Contact us today for a free consultation.