The solar investment tax credit (ITC) is a tax credit that can be claimed on federal corporate income taxes for a percentage of the cost of a solar photovoltaic (PV) system that is placed in service during the tax year.
Who qualifies for the solar ITC?
The solar ITC program was created for commercial use – in other words, you are eligible to use the credit if you are a business that is subject to U.S. federal income taxes. Tax-exempt entities, such as charities, are not eligible for the solar ITC.
How much credit is my project eligible for?
For projects that commenced construction on or before December 31, 2021, a 26% tax credit is available. In order to utilize the credit on your 2021 taxes, at least 5% of the qualifying solar project costs must be incurred. Expenses must be integral to the generation of electricity, and equipment and services must be delivered (or delivered within 3 to 5 months after payment).
What requirements does my solar project have to meet to be eligible?
The requirements for solar ITC projects are simple:
- Project must be located in the United States or a U.S. Territory, though they can only be used against federal income tax obligations.
- The system must use new (and in some cases, certain limited previously used) equipment.
- Energy generated may not be used for heating swimming pools.
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