Learn What You Need to Know About the Residential Federal SolarTax Credit

Solar energy is available every day, even on cloudy days. U.S. Government encourages Americans to use this pollution-free and renewable power source that causes no greenhouse gases.


In addition, the federal residential solar energy offers a financial incentive in the form of tax credit that you can claim on the amount of income tax when you install a solar photovoltaic (PV) system on your house.

Benefits of adopting solar electricity system

  • Tax credit and lower electricity bills are the significant benefits of switching to the solar energy source.
  • Lawrence Berkeley National Laboratory reports that installing solar equipment on your house increases the value by about $15000__ compared to a selling price house without a PV system.
  • Solar panels are portable __ you can install on a houseboat, rooftop, yard, or anywhere __where there is direct sunlight. 
  • Electricity bill rates become higher during peak hours. You can cut this cost altogether because solar panels generate maximum direct power in those peak hours.
  • There is minimum energy loss to transport the electricity to the destination due to the small distance between panels to appliances.
  • Installing a solar system create thousands of job in the local market. 
  • There is no noise of producing solar electricity.
  • No greenhouse gases effect 
  • No carbon emission

How to calculate tax credit?

Tax credit amounts vary from year to year. Solar equipment placed in service between:

  • 2017- 2019 is eligible for 30% tax credit
  •  2020 – 2022 is eligible for a 26% tax credit
  •  2023 is eligible for a 22% tax credit

The tax credit is the percentage amount of cost of installing a solar system that is 26% __ the years 2020-2022. For instance, if a solar system installed on a rooftop of your house costs you $10,000, you can claim a $2600 tax credit.