IRS Confirms Residential Solar Tax Credit Remains at 30% Through 2032

The IRS has reaffirmed that the residential clean energy credit established under the Inflation Reduction Act remains at 30% of total system cost for solar installations completed through December 31, 2032. The credit then steps down to 26% in 2033 and 22% in 2034 before expiring for residential systems. Homeowners claim the credit on IRS Form 5695 filed with their annual federal income tax return for the year the system is placed in service. The 30% applies to the full installed cost including panels, inverters, mounting hardware, labor, and battery storage systems installed simultaneously with solar. A battery added after the fact qualifies separately under the same 30% rate. There is no maximum dollar cap on the credit. If the credit exceeds a homeowner's tax liability in a given year, the unused portion carries forward to subsequent tax years indefinitely. Eligible improvements beyond panels include solar water heaters certified by SRCC, geothermal heat pumps, and small wind turbines. Renters do not qualify, and the property must be a US residence — vacation homes qualify but rental properties do not unless the owner also uses the property personally. The IRS notes that leased systems are ineligible; the tax credit flows to the system owner, which for a lease or PPA is the third-party financier.