IRS Form 5695 - Solar Electric Tax Credits for Solar Panel Systems

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The residential energy credit is available to taxpayers who make certain types of improvements to their principal residence or a second home.

The credits consist of a Residential Clean Energy Credit (IRC Section 25D) or the Energy Efficient Home Improvement Credit (IRC Section 25C).

In this video, I address the Solar Electric Property Tax Credit under IRC Section 25D(a)(1). The credit is available to taxpayers who install qualified property in their principal residence or second home.

For 2022, the credit amount is 30% of the qualified costs (years 2022 through 2032). The credit percentage drops to 26% for 2033, and then 22% for the years 2033 through 2034.

The credit is a nonrefundable tax credit, meaning the taxpayer can use the credit to offset their tax liability to the extent they have tax, and any remaining amounts are carried forward to future tax years.

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