Solar Tax Credit Calculator 2026 — Federal ITC 30%

Understanding your results

Tax credit vs tax deduction — the critical distinction: A tax deduction reduces your taxable income; the savings depend on your tax bracket. A $6,000 deduction saves a 22% bracket taxpayer $1,320. A tax credit directly reduces taxes owed dollar-for-dollar. A $6,000 credit saves $6,000 regardless of tax bracket. The ITC is a credit — far more valuable per dollar.

How to claim the ITC on your taxes: File IRS Form 5695 (Residential Energy Credits) with your federal tax return for the year the system is placed in service (operational). Part I covers qualified solar electric property costs. The calculated credit flows to Schedule 3, Line 5, then to Form 1040. If using tax software (TurboTax, H&R Block), the software guides you through Form 5695 automatically. For systems over $50,000, professional tax advice is recommended.

Carryforward rules: If your tax credit exceeds your tax liability in year one, the excess carries forward to the next tax year indefinitely (no expiration). Example: $6,000 credit, $4,000 tax liability in year one → $4,000 used, $2,000 carries to year two. There is no limit on how many years the credit can be carried forward, though the 30% rate only applies to systems placed in service by December 31, 2032.

What costs qualify for the ITC: The 30% credit applies to: solar panels and mounting hardware, inverters (string, micro, power optimisers), battery storage (3+ kWh capacity, as of IRA 2022), wiring and electrical work directly related to the solar installation, and permit and inspection fees. It does not cover: roof repairs or replacement (unless the roof section directly supports panels), general electrical panel upgrades unrelated to solar, or landscaping.