Understanding the Solar Tax Credit: How It Works and Why You Shouldn’t Wait

If you're thinking about going solar, you’ve probably heard about the Federal Solar Tax Credit — often advertised as a “30% rebate” or “instant savings.” But what does that actually mean? Is it really free money? And will it be around next year?

Let’s clear up the confusion.

What Is the Federal Solar Tax Credit (ITC)?

The Investment Tax Credit (ITC) is a federal incentive that lets you deduct 30% of the cost of your solar installation from your federal income taxes.

✔️ It’s not a rebate.✔️ It’s not a check from the government.✔️ It’s a tax credit, which means it reduces the amount you owe when you file your income taxes.

Example: If your solar installation costs $25,000, you may be eligible for a $7,500 tax credit (30%).If you owe $9,000 in taxes that year, your bill could be reduced to $1,500. If you owe less than $7,500, the unused portion rolls over to the next tax year.

Who Qualifies for the Solar Tax Credit?

To qualify, you must:

• Own your solar system (leased systems don’t count)*

• Install it on a primary or secondary residence in the U.S.

• Have tax liability (you must owe federal income taxes)

• Install between now and 2032 to get the full 30%

* If you financed the system through the seller of the system and you are contractually obligated to pay the full cost of the system, you can claim the federal solar tax credit based on the full cost of the system.

Is It Going Away?

While the federal solar tax credit is set at 30% through 2032, it won’t last forever. The credit is scheduled to decrease in 2033 and 2034, and disappear entirely for homeowners in 2035—unless Congress votes to extend it again. Keep in mind, this credit has changed multiple times before due to shifts in policy, political priorities, or budget adjustments. So while it’s guaranteed for now, there’s no telling how long it will actually stick around.

That means if you’ve been considering solar, locking in your project sooner rather than later could be the difference between thousands in tax savings—or missing out entirely.

Why Act Now?

📉 Waiting could cost you. Not only might the tax credit shrink or disappear in future years, but:

• Equipment and labor costs are rising

• Utility rates continue to climb

• Some states and utilities are reducing or eliminating net metering benefits

Locking in your solar project while the 30% credit is guaranteed ensures you get the biggest return on your investment.

Other Incentives You Might Qualify For

Besides the federal credit, your state, city, or utility may offer:

• Property tax exemptions

• Solar renewable energy credits (SRECs)

• State or local rebates

• Battery storage incentives

• Net metering credits

• 
  

Final Thoughts

The 30% federal tax credit is one of the most powerful tools to make solar affordable — but it’s only helpful if you understand how to use it.

At Waring Electric, we walk you through:

• What incentives you qualify for

• How to apply the tax credit

• What changes may be coming

• Whether now is truly the best time to go solar (hint: it probably is)

📞 Ready to take control of your energy costs? Call us today for a free solar consultation — and let’s make sure you get every dollar you deserve.