The 2026 solar tax credit, explained

The US federal solar tax credit is 30% of your total system cost, with no dollar cap. On a $20,000 system that's $6,000. It's a credit against tax you owe, not a rebate cheque — but unused amounts can generally be carried forward to future years.

What counts toward the credit

Panels, inverters, racking and wiring
Labour for installation, assembly and wiring
Permitting fees and inspection costs
Batteries with at least 3 kWh capacity
Sales tax on eligible expenses

Roof repairs generally do not count, though some structural work directly required for mounting may. Ask your tax preparer about your specific case.

What it's worth

System cost	Credit	Net cost
$12,000	$3,600	$8,400
$18,000	$5,400	$12,600
$25,000	$7,500	$17,500
$35,000	$10,500	$24,500

The catch people miss

It offsets tax you owe. If your total federal tax liability for the year is $3,000 and your credit is $6,000, you claim $3,000 now and carry the rest forward. Retirees and low-tax-liability households often can't use the full amount in year one — worth checking before assuming the headline discount applies to you.

How to claim it

File IRS Form 5695 with your federal return for the tax year the system was placed in service — meaning installed and operational, not merely paid for. Keep your itemised invoice and permission-to-operate letter.

State and utility incentives stack

Many states add their own credits, rebates or performance payments on top, and these usually apply before the federal credit is calculated. The DSIRE database is the standard reference for what's available where you live.

This is general information, not tax advice. Rules change and individual circumstances differ — confirm with a qualified tax professional before relying on any of it.

Canadian readers

The 30% credit is US-only. Canada offers the Canada Greener Homes programme and various provincial incentives instead; our Canadian city pages exclude the US credit from their maths for that reason.

What this looks like in real cities

Measured rooftop data, spanning the range from fastest to slowest payback we have found:

City	Sun hrs/yr	Rate	Payback
Boston, MA	1,446	30.1¢	5.4 yrs
San Francisco, CA	1,819	31.2¢	8.8 yrs
South Bend, IN	1,500	15.3¢	10.5 yrs
Idaho Falls, ID	1,646	11.2¢	13.1 yrs
Montreal, QC	1,384	7.9¢	30.7 yrs

See all 209 cities →

Frequently asked

Is there an income limit on the solar tax credit?

No. The federal residential clean energy credit has no income cap and no maximum dollar amount.

Can I claim the credit on a second home?

Generally yes for a home you live in part of the year, but not for a rental property you do not occupy.

What if I lease my panels?

You cannot claim the credit on leased systems or power purchase agreements. The company that owns the equipment claims it.

Check your own roof free →

General information, updated 2026-08-22. Not financial, tax or engineering advice.