Post updated Jul 11, 2025.
What exactly is the Federal Solar Investment Tax Credit (ITC)? Watch StraightUp Solar’s own Professor Ky the Solar Guy explain how it works.
The FITC is a dollar for dollar credit against your tax liability – not a deduction. This credit covers 30% 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, 30% of that system cost is $6,000. You can apply your $6,000 tax credit against your $5,000 tax liability. In this case, you would pay no taxes the first year, and apply the remaining $1,000 toward taxes the second year. To learn more about solar incentives and financing options, visit our Illinois or Missouri financials pages.
The federal solar tax credit is non-refundable and requires that you have a tax liability to be eligible. The excess credit can be carried over for the following years. The home must be owned by the taxpayer but they don’t have to be the resident. For example, if you rent out your home or if you have a vacation home, you can apply the tax credit to that property. Consult your tax professional to find out how this credit can work best for you.
Disclaimer – we are not tax professionals, we are solar experts. Please consult with your tax advisor to see how the Federal Investment Tax Credit can work best for you.
On July 4, 2025, President Donald Trump signed a tax act that eliminated the 30% residential solar tax credit in the FITC. Under the new law, a solar PV system must be installed by December 31, 2025 to be eligible for the credit. This affects both solar panel systems and home battery storage.
While solar will continue to deliver long-term benefits—like lower electric bills, protection from rising utility rates, and energy independence—the opportunity to claim this substantial incentive for maximum savings ends after 2025. Get started today for your home or business.
