There is a federal tax credit for solar is a non-refundable credit that can be claimed on federal income taxes for a percentage of the cost of a solar photovoltaic (PV) system and home battery. The credit is currently 30% of the total cost of the system, including installation.

Note that this is a tax credit, not a tax deduction. An income-tax credit is a reduction of your taxes while an income-tax deduction is a reduction of your taxable income. For example, if your total federal income-tax for 2016 (before subtracting estimated tax payments and withholding) would have been $16,000, but you got a $8,000 tax credit from purchasing the example solar, photo-voltaic (PV) system, your tax would only be $8,000; the credit comes off the tax. That’s a good thing - tax credits are significantly more valuable than tax deductions!

There is no maximum amount that can be claimed, so the credit can be significant for homeowners. For example, a homeowner who installs a $20,000 solar system would be eligible for a $6,000 tax credit.

The credit can be claimed on the year in which the solar system is installed. So, if you install a solar system in 2023, you would claim the credit on your 2023 tax return.

Typically, homeowners use the tax credit refund to “buy down” the cost of their system, further reducing their monthly payments.

Additionally, many local and state governments offer tax incentives and rebates for solar.