Federal Tax Credit for Geothermal and Solar
The Federal Investment Tax Credit applies to both solar and geothermal. This tax credit allows you to deduct 26 percent of the cost of installation from your federal taxes. The tax credit is 26% for systems placed in service by 12/31/2022. For systems placed in service by 12/31/2023, the tax credit is 22%. You may claim a tax credit for a system if it is located in the United States and is owned and used as a residency by the taxpayer. However, it does not have to be your primary residency.
There is no cap or limit on the tax credit. If the tax credit exceeds the amount you owe in federal taxes the year you install, the excess amount may be carried forward to the following year.
To apply for the tax credit, complete IRS form 5695 as part of your tax return; calculate the credit on the form and enter the result on your 1040.
We recommend consulting a tax professional when comes time to claim your tax credit.
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