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How to Claim the Residential Solar Tax Credit

Matt Powers Matt Powers 4 min read
How to claim the residential solar tax credit

2026 Update: The 30% residential solar tax credit (Section 25D) was eliminated effective January 1, 2026 as part of the “One Big Beautiful Bill.” If you installed solar before that date, the information below still applies—you can claim the credit on your 2025 tax return. For homeowners going solar in 2026, see how third-party ownership makes solar accessible without the residential credit.

If you installed solar before January 1, 2026, one of the most significant financial incentives available to you is the 30% residential clean energy credit, commonly referred to as the solar tax credit. This tax credit significantly reduces the cost of installing solar panels, offering homeowners a 30% credit on the total cost of the system. For commercial solar, the tax credit is known as the ITC (Investment Tax Credit) and is claimed differently.

Please note, this article is for informational purposes only. We are not tax professionals, and no part of this should be considered legal or tax advice. Be sure to consult with a tax professional to make sure you can claim the credit for yourself.

Eligibility for the Residential Solar Tax Credit

To qualify for the 30% solar tax credit, your system must meet certain criteria:

  • Homeowners must own their solar system (i.e., it can’t be leased).

  • The system must be installed on a primary or secondary residence in the U.S. (rental properties generally don’t qualify for this credit).

  • The credit applies to both solar photovoltaic (PV) panels and solar water heating systems, provided they meet IRS energy-efficiency standards.

Claim the residential solar energy tax creditMake sure to check your eligibility for tax credits so you can maximize your solar investment. If you’re not sure about your eligibility, check with your CPA and make sure that you can make use of the 30% tax credit.

What Form is Used to Claim the Solar Tax Credit?

Claiming the solar tax credit is a straightforward process if you follow these steps:

  • Complete IRS Form 5695: To claim the solar tax credit, you’ll need to fill out IRS Form 5695, “Residential Energy Credits.” This form allows you to calculate the credit based on the cost of the solar system.

  • Enter the Credit on Your 1040 Tax Form: After completing Form 5695, enter the calculated credit on your IRS Form 1040 when filing your federal taxes.

  • Document Your Expenses: Be sure to keep all receipts and invoices related to the installation, as the IRS may require proof of the system’s costs.

It’s important to complete these steps accurately and in line with IRS requirements. Check with your CPA to make sure you are eligible for the credit, and that the forms are properly filled out.

Tips About the Solar Tax Credit

  • Consult a Tax Professional: While the process is simple, working with a tax expert can ensure accuracy and help maximize your savings.

  • The 30% residential credit ended January 1, 2026. If you installed before that date, you can still claim it. The commercial credit remains available through at least 2027.

  • Offset More Than Solar Panels: The credit applies to additional equipment like inverters, mounting hardware, and even labor costs related to the installation.

  • Visit the IRS website on form 5695 for the most up-t0-date information.

Going Solar in 2026?

While the residential tax credit is no longer available for new purchases, solar remains a strong investment in Virginia thanks to rising electricity rates and the availability of solar leases and PPAs. Through third-party ownership, homeowners can still benefit from the commercial tax credit—which remains at 30% through at least 2027—because the leasing company claims the credit and passes savings on to you.

Summing it up

If you installed solar before January 1, 2026, the 30% residential tax credit is still available to you—follow the steps above to claim it. For homeowners going solar in 2026 and beyond, Virtue Solar can help you explore options that deliver real savings even without the residential credit. The fundamentals haven’t changed: solar reduces your energy costs, adds value to your home, and protects you from rising utility rates.

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