{"id":11766,"date":"2024-02-14T19:57:12","date_gmt":"2024-02-14T19:57:12","guid":{"rendered":"https:\/\/www.solar.com\/learn\/?p=11766"},"modified":"2024-02-15T22:55:17","modified_gmt":"2024-02-15T22:55:17","slug":"7-billion-reason-to-go-solar-in-2024","status":"publish","type":"post","link":"https:\/\/www.solar.com\/learn\/7-billion-reason-to-go-solar-in-2024\/","title":{"rendered":"The $7 Billion Reason to Go Solar in 2024"},"content":{"rendered":"

Tax season is a drag — unless you recently installed solar.<\/p>\n

This year, US homeowners are expected to claim an estimated $7 billion in tax credits for the solar systems they installed in 2023. (And that doesn’t even include tax credits for home batteries!)<\/p>\n

The federal solar tax credit<\/a> is worth 30% of the installed cost of a residential solar system, with no maximum amount. So, whether you spend ten thousand or fifty thousand on a solar system, Uncle Sam is offering to eat 30% of the cost.<\/p>\n

This tax credit was extended through 2032 with the passage of the Inflation Reduction Act (IRA). However, this incentive can — and almost certainly will<\/a> — be repealed in early 2025 if a new administration takes the White House.<\/p>\n

That would make 2024 the last year to qualify for this tax credit and a very good year\u00a0<\/em>to go solar.<\/p>\n

$7 billion in solar tax credits for 2023<\/h2>\n

A record 7,000 Megawatts (MW) of residential solar capacity was installed in 2023, according to data from Wood Mackenzie. To break that down, the average home solar system has roughly 7 kilowatts of capacity. So, 7,000 MW is an average-sized system on 100,000 homes.<\/p>\n

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Wood Mackenzie also reports the average cost of a solar system in 2023 was $3.42 cents per watt<\/a> (1 MW = 1,000,000 watts). At that price point, Americans spent a combined $23.9 billion on residential solar in 2023 — making them eligible for a total of $7.2 billion in federal income tax breaks.<\/p>\n

In early 2024, these new solar owners are claiming their tax break and enjoying their first full year of generating their own clean electricity.<\/p>\n

Will 2024 be the last year to qualify for the solar tax credit?<\/h2>\n

There’s a reasonable chance that 2024 is the last year for homeowners to install a solar system that qualifies for the 30% federal tax credit. It depends on how that 2024 general election pans out.<\/p>\n

Political opinions aside, it’s a matter of fact that former President Donald Trump has vowed to repeal clean energy tax credits<\/a> if he is re-elected in 2024. This presumably includes the tax credits and rebates for solar, batteries, EVs, EV chargers, and a wide range of home electrification upgrades<\/a>.<\/p>\n

In this scenario, US homeowners would still have all of 2024 to install systems that qualify for this incentive before the Trump administration takes over in 2025.<\/p>\n

However, given the average solar project timeline of 3-4 months, waiting for election results in November may not leave enough time to install a system before the end of the year — especially if there is a rush to claim the credit before it expires.<\/p>\n

The safe bet is to start a project early in 2024 to ensure eligibility.<\/strong> Plus, it’s a good idea to have your solar system up and running before\u00a0<\/em>your high summer electricity bills<\/a> kick in.<\/p>\n

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Claiming the solar tax credit<\/h2>\n

The federal solar tax credit is claimed on IRS Form 5695<\/a> for the tax year the system was installed. We have a detailed walk-through here<\/a>, but please consult a licensed tax professional with questions about your personal tax situation.<\/em><\/p>\n

The credit is worth 30% of your total project cost after rebates and discounts are applied. So, if your out-of-pocket cost was $25,000, you can claim a $7,500 tax credit for the year it was “deemed operational” (i.e., installed and passed inspection).<\/p>\n

Here are some things to keep in mind:<\/strong><\/p>\n