The federal solar tax credit is a government incentive that makes residential solar panels significantly more affordable. It’s been available for decades, but will sadly be terminated at the end of 2025.
If you’re considering solar for your home on the North Coast, this guide will break down everything you need to know about the solar tax credit, how much you can save, and how to claim it before it ends.
What Is the Federal Solar Tax Credit?
The solar tax credit goes by many different names. You may hear it referred to as the Investment Tax Credit (ITC) or the Residential Clean Energy Credit. But no matter what you call it, it’s the best solar incentive available in 2025.
The solar tax credit reduces your federal income tax liability by a percentage of your solar installation costs for the year you install your system. Its value has changed over the years, but it’s currently worth 30% of your solar installation costs.
What’s Changing with the Solar Tax Credit in 2025?
The “One Big Beautiful Bill Act” (OBBBA) made significant changes to the solar tax credit when it was signed into law on July 4, 2025.
Here are the key changes homeowners need to know:
- Expires on December 31, 2025 – The tax credit will be eliminated on the last day of the year. Solar systems installed after this date will not qualify.
- No Phase-Out – The tax credit will end abruptly, unlike earlier versions, which included a gradual step-down schedule.
- Eligibility Requirements – To qualify, you must complete your solar installation by December 31, 2025.
Who Can Claim the Solar Tax Credit?
The solar tax credit is available to almost any US taxpayer who installs grid-tied or off-grid solar panels on their home. It’s available for solar installations on existing homes, new construction, primary residences, and secondary residences/vacation homes.
To be eligible, you must:
- Install solar panels before December 31, 2025
- Own your home (renters don’t qualify)
- Own your solar panel system (leased systems don’t qualify)
- Have enough tax liability to claim the credit
What Costs are Eligible for the Solar Tax Credit?
Almost all of the costs associated with your solar panel installation are eligible for the solar panel tax credit, including:
- Solar panels
- Inverters
- Battery storage systems
- Installation labor
- Permitting fees
Claiming the Solar Tax Credit for Battery Storage
Solar batteries are eligible for the solar tax credit if they’re installed by December 31, 2025.
You can claim the tax credit for solar plus battery installations, battery add-ons to an existing solar panel system, and standalone batteries that charge from the electric grid.
How Much Can You Save with the Solar Tax Credit?
The solar tax credit is worth 30% of your solar installation costs, so how much you save depends on how much you spend.
If your total solar system costs $25,000, for example, you can claim a $7,500 tax credit on your federal return. Most homeowners save around $7,000-$9,000.
How to Claim the Solar Tax Credit in 2025
Claiming your solar tax credit is simple. Here’s what you need to do:
- Start Your Installation As Soon As Possible
Solar panel installations take time. If you want to complete your installation before the tax credit deadline, you need to get started soon. We may run into permitting and approval delays as we get closer to the deadline, and starting now will help you beat the rush.
- File the Right Paperwork
Once your installation is complete, all you have to do is fill out one extra form when you file your 2025 taxes. Here are the steps:
- Keep all documentation – Save your receipts and any documents related to your solar installation.
- File IRS Form 5695 – This is the form for residential energy credits.
- Enter the credit on your 1040 tax return – The amount from Form 5695 will be added to your tax return to reduce your liability.
The deadline is fast approaching, and you don’t want to miss your chance to save 30% on your solar installation. Six Rivers Solar can guide you through the process and ensure you’re ready to claim your savings before the deadline. We’re a locally owned solar panel company that’s been serving homeowners in Humboldt and Del Norte Counties for years, and we would love to help you go solar.
