Solar inverter tax points

How does the solar tax credit work in 2025?

In 2025, the federal solar tax credit equals 30% of solar installation costs, directly reducing your federal income tax liability. Here’s an example of how the solar tax credit works: If you installed a home solar power system for $20,000, you could claim a tax credit of $6,000. $20,000 solar installation costs X 30% = $6,000 tax credit value

What is a solar investment tax credit?

The solar Investment Tax Credit, also known as the federal solar tax credit, is a dollar-for-dollar reduction in your federal income taxes based on the cost of your solar energy system. Unlike a tax deduction that reduces your taxable income, the ITC directly reduces the amount of tax you owe to the federal government.

How does the federal solar tax credit work?

The federal solar tax credit operates under two main sections of the tax code: Section 25D applies to residential solar installations and allows homeowners to claim 30% of their total system cost as a tax credit. This includes: Section 48 covers commercial, utility-scale, and business solar installations.

Are there income limits on the solar tax credit?

There are no income limits on the solar tax credit, so all individual taxpayers are eligible to claim the credit on qualifying solar energy equipment investments made to their homes within the United States.