Post updated July 11, 2021.

What exactly is the Federal Investment Tax Credit? Watch StraightUp Solar’s own Professor Ky the Solar Guy explain how it works. He uses 2020 in the example, but it works the same for 2021.


The FITC is a dollar for dollar credit against your tax liability – not a deduction. This credit covers 26% of your total solar project costs. For example, if you owe $5,000 in taxes, that $5,000 is your tax liability. If you bought a solar system for $20,000, 26% of that system cost is $5,200. That means – you can apply your $5,200 tax credit against your $5,000 tax liability. In this case, you would pay no taxes the first year, and only $200 in taxes the second year. Are you interested in learning more about solar investments and financing options? You can learn more here.

To take advantage of this tax credit on your 2021 taxes, you’ll need to start your solar quote asap here.

Disclaimer – we are not tax professionals, we are solar experts. Please consult with your tax advisor to see how the 26% Federal Investment Tax Credit can work best for you.

To achieve this 26% tax credit, you must get into our installation queue before the credit steps down or expires. Any residential projects installed on or after January 1st, 2023 will miss out on this valuable incentive. If you own a business with an array scheduled for installation in 2021 or 2022, you do not need to have the array fully completed by the first of the year to benefit from the tax credit. You can pay for a substantial portion of the array (safe harbor) before the year-end to apply the 26% to your 2023 taxes.

When the 26% Federal Investment Tax Credit expires at the end of 2022, it will drop down to 22% for all markets in 2023. Then, in 2024 the 22% credits expires and steps down to become a 10% credit for commercial projects. The credit goes away entirely for residential projects in 2024.

Since the implementation of the Federal Investment Tax Credit, the solar industry in the United States has grown by 10,000% – creating thousands of jobs, and adding megawatts of clean energy onto our grid. Want to learn more about the history of the federal Investment Tax Credit, and what organizers are doing to defend the federal Investment Tax Credit? Visit the Solar Energy Industries Association website to learn more.  To learn about other incentives available to homeowners, visit our Financials For Homes webpage.

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