The 2026 solar tax credit, explained
The US federal solar tax credit is 30% of your total system cost, with no dollar cap. On a $20,000 system that's $6,000. It's a credit against tax you owe, not a rebate cheque — but unused amounts can generally be carried forward to future years.
What counts toward the credit
- Panels, inverters, racking and wiring
- Labour for installation, assembly and wiring
- Permitting fees and inspection costs
- Batteries with at least 3 kWh capacity
- Sales tax on eligible expenses
Roof repairs generally do not count, though some structural work directly required for mounting may. Ask your tax preparer about your specific case.
What it's worth
| System cost | Credit | Net cost |
|---|---|---|
| $12,000 | $3,600 | $8,400 |
| $18,000 | $5,400 | $12,600 |
| $25,000 | $7,500 | $17,500 |
| $35,000 | $10,500 | $24,500 |
The catch people miss
How to claim it
File IRS Form 5695 with your federal return for the tax year the system was placed in service — meaning installed and operational, not merely paid for. Keep your itemised invoice and permission-to-operate letter.
State and utility incentives stack
Many states add their own credits, rebates or performance payments on top, and these usually apply before the federal credit is calculated. The DSIRE database is the standard reference for what's available where you live.
Canadian readers
The 30% credit is US-only. Canada offers the Canada Greener Homes programme and various provincial incentives instead; our Canadian city pages exclude the US credit from their maths for that reason.
What this looks like in real cities
Measured rooftop data, spanning the range from fastest to slowest payback we have found:
| City | Sun hrs/yr | Rate | Payback |
|---|---|---|---|
| Kahului, HI | 1,627 | 42.1¢ | 3.5 yrs |
| Washington, DC | 1,562 | 17.4¢ | 8.8 yrs |
| Topeka, KS | 1,573 | 14.1¢ | 10.9 yrs |
| Guildford, South East | 1,005 | 26.1¢ | 12.9 yrs |
| Trois-Rivières, QC | 1,347 | 7.9¢ | 31.9 yrs |
Frequently asked
Is there an income limit on the solar tax credit?
No. The residential credit has no income cap. It is limited instead by your federal tax liability: it reduces tax you owe rather than paying cash, so a household owing little federal tax may not capture the full 30% in one year, though it can generally be carried forward.
Can I claim the credit on a second home?
Generally yes for a home you live in part of the year, but not for a purely rental property you never occupy. Rules differ for mixed-use properties, and the credit is claimed against your own tax return, so confirm your situation with a tax professional before relying on it.
What if I lease my panels?
You cannot claim it — the system owner does, which is the leasing company. That is one reason leases return less to you over time: the incentive goes to whoever owns the equipment. If capturing the credit matters to your numbers, buying or financing a purchase is the route.
Related guides
General information, updated 2026-08-22. Not financial, tax or engineering advice.