The Federal Solar Tax Credit (ITC): What You Can Claim in 2026
The 30% federal Investment Tax Credit is one of the best financial incentives available to solar buyers. Here's how it works and how to claim it.
The Federal Solar Tax Credit (ITC) in 2026
The Investment Tax Credit (ITC) allows homeowners to deduct 30% of the total cost of their solar installation from their federal income taxes. It's one of the most valuable incentives available — and many homeowners don't fully understand how to use it.
How It Works
If your solar system costs $20,000, you can claim a $6,000 credit directly against your federal tax bill. This is a credit, not a deduction — it reduces your taxes dollar-for-dollar.
What's Included
- Solar panels
- Inverters and racking hardware
- Labor and installation costs
- Battery storage (even if added separately)
- Electrical upgrades required for the installation
- Permit fees
Who Qualifies
- You must own the system (not lease it or use a PPA)
- The system must be at your primary or secondary U.S. residence
- You must have sufficient federal tax liability to use the credit
What If My Tax Bill Is Less Than the Credit?
The ITC can be carried forward to future tax years. So if your credit is $6,000 but your federal tax bill is only $4,000, you'll carry the remaining $2,000 into next year.
California State Incentives
California doesn't offer a direct state solar tax credit, but the California Solar Initiative and local utility rebates may still apply depending on your utility and system type.
Self-Generation Incentive Program (SGIP)
California's SGIP offers rebates for battery storage paired with solar. Incentive amounts vary — check the SGIP website for current availability in your area.
Always consult a tax professional to confirm your eligibility and how to properly claim the credit on IRS Form 5695.
