What is the federal solar tax credit (ITC) in 2026?

The federal Investment Tax Credit (ITC) is 30% for solar installations in 2026 through 2032. It applies to the total installed cost including panels, inverter, battery, labor, and permits.

Does the ITC cover battery storage?

Yes — battery storage systems like Tesla Powerwall are fully eligible for the 30% ITC when installed simultaneously with solar panels in the same tax year.

What if I owe less tax than the ITC amount?

Unused ITC credits carry forward to future tax years indefinitely. If your credit exceeds your tax liability this year, the remainder rolls over to next year's return.

US Solar Tax Credit Calculator

Calculate your 30% federal ITC credit. Enter total system costs — get your exact credit amount and net cost after the federal incentive.

System costs

Solar panels?

Inverter?

Battery storage?

Installation labor?

Tax year?

Permits & inspection?

Electrical upgrades?

Federal ITC credit (30% for 2026)

$7,800 tax credit

Total eligible cost$26,000

Credit rate30%

Net cost after credit$18,200

ITC step-down schedule: 2026+: 30% → 2033+: 26% → 2034+: 22% → 2035+: 0%

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How to Use This Calculator

Enter each cost component

The ITC (Investment Tax Credit) applies to the entire installed cost of your solar system — not just the panels. Enter costs separately for solar panels, inverter, battery storage, and installation labor. Use "More costs" to add permits and electrical upgrades. Every dollar you enter is a dollar the 30% credit applies to.

Include battery storage

Battery storage (like Tesla Powerwall, Enphase IQ Battery, or Franklin WH) is fully eligible for the ITC when installed simultaneously with solar in the same tax year. If you add a battery to an existing system in a separate year, only the battery qualifies (not the existing panels again).

Select the tax year

Choose the year you'll have the system installed and operational. The credit applies to the tax return for that year. If your tax liability is less than the credit amount, the unused portion carries forward to the next tax year — it does not expire under current law.

Use the presets

Click a scenario — Small (8 kW), Average (10 kW), Large + battery, or Commercial — to load realistic cost breakdowns for each system type. Adjust to match actual installer quotes.

What Qualifies for the ITC

Solar panels (photovoltaic modules)
Inverters (string, microinverters, or hybrid)
Battery storage systems (when installed with solar)
Installation labor and contractor fees
Permitting and inspection fees
Electrical upgrades required for the solar installation
Mounting hardware, racking, and wiring
Monitoring systems
Sales tax on all eligible components

The ITC does not cover routine maintenance, extended warranties, or panel cleaning services. Consult a tax professional for your specific situation.

ITC Step-Down Schedule

2022 – 2032: 30% (residential and commercial) 2033: 26% 2034: 22% 2035+: 0% (unless extended by Congress)

The Inflation Reduction Act (IRA) of 2022 extended and expanded the ITC. The 30% rate is locked in through 2032 — so if you're considering solar in the next several years, the credit is at its maximum. After 2032, it steps down unless Congress acts to extend it (which has happened multiple times historically).

Example

The Patel family — Phoenix, AZ

Installing a 10 kW system with a Powerwall backup battery in 2026.

Solar panels (25 × 400W)$12,500

SolarEdge inverter$2,800

Tesla Powerwall (13.5 kWh)$11,500

Installation labor$6,200

Permits & electrical$1,500

Total system cost$34,500

ITC Calculation

ITC rate (2026)30%

Federal tax credit$10,350

Net cost after credit$24,150

The Patels claim a $10,350 federal tax credit on their 2026 taxes. Since their tax liability exceeds this amount, they receive the full credit in year one. The effective cost of their solar + battery system drops from $34,500 to $24,150.

FAQ

Is the solar ITC a tax credit or a tax deduction? ▼

It's a tax credit, which is more valuable than a deduction. A deduction reduces your taxable income; a credit reduces your actual tax bill dollar-for-dollar. If you owe $15,000 in taxes and have a $10,000 ITC credit, you only pay $5,000. A 30% credit on a $35,000 system saves exactly $10,500 in taxes — not 30% of 30% or any other complicated calculation.

What if my tax liability is less than the ITC credit amount? ▼

Unused ITC credits carry forward to future tax years indefinitely under current law. If you owe $5,000 in taxes but have a $10,000 credit, you owe $0 this year and carry the remaining $5,000 forward to next year's tax return. The credit doesn't expire as long as it's carried forward. However, you cannot get a refund — if you have zero tax liability, the credit provides no immediate benefit (though it still carries forward).

Can I claim the ITC if I finance my solar system? ▼

Yes — you can claim the ITC on the full system cost even if you financed it with a solar loan. The credit is based on what the system cost, not how you paid for it. If you financed $35,000 and the ITC is $10,500, you can still claim the full $10,500 credit. Many homeowners use the ITC refund to pay down their loan balance in year one, reducing monthly payments.

Are there state solar tax credits in addition to the federal ITC? ▼

Many states offer additional incentives on top of the federal ITC. Examples: New York offers a 25% state credit (up to $5,000), Massachusetts offers 15%, and Maryland offers $1,000. Some states offer sales tax exemptions on solar equipment, property tax exemptions on the added home value, and cash rebates. Use our Solar Cost by State Calculator to see state-specific incentives.

Does the ITC apply to leased solar systems? ▼

No — if you lease your solar panels, the leasing company owns the system and claims the ITC, not you. The leasing company may pass some savings along through lower lease rates, but you personally don't get the tax credit. To claim the ITC, you must own the solar system outright (purchase or solar loan). This is one reason owning typically provides better long-term value than leasing.