The federal solar tax credit (ITC) remains one of the most valuable incentives for homeowners switching to solar energy. As we approach 2025, understanding how this tax credit works—and how to maximize your savings—is crucial for anyone considering solar panels or battery storage.
In this guide, we cover:
✔ What the solar tax credit is and how it works in 2025
✔ Eligibility requirements for homeowners
✔ How much you can save with the ITC
✔ Changes to the credit in 2025 and beyond
✔ How to claim the credit on your taxes
By the end, you’ll know exactly how to take advantage of this incentive to lower your solar costs by 30% or more.

What Is the Federal Solar Tax Credit (ITC)?
The Investment Tax Credit (ITC), also known as the solar tax credit, allows homeowners to deduct 30% of the cost of a solar panel system from their federal taxes.
Key Details for 2025:
✅ 30% credit for systems installed in 2024–2032
✅ Drops to 26% in 2033 and 22% in 2034 before expiring
✅ Applies to solar panels, batteries (if paired with solar), and installation costs
How Much Can You Save with the ITC in 2025?
The ITC covers 30% of your total solar installation costs, including:
- Solar panels
- Inverters
- Mounting equipment
- Labor & permitting
- Solar batteries ( if charged by solar at least 75% of the time )
Example Savings:
System Cost 30% Tax Credit (2025) Your Final Cost After Credit
$20,000 $6,000 $14,000
$30,000 $9,000 $21,000
$40,000 $12,000 $28,000
Note: The credit is non-refundable, meaning it can reduce your tax bill to $0 but won’t result in a refund if your liability is lower than the credit amount.
Eligibility Requirements for the Solar Tax Credit
To qualify for the ITC in 2025, you must:
✔ Own your solar system (leases/PPAs don’t qualify)
✔ Install solar on a primary or secondary U.S. residence (rental properties may qualify under different rules)
✔ Have sufficient federal tax liability (the credit can roll over to future years if unused)
Does the ITC Cover Solar Batteries?
✅ Yes, if:
The battery is paired with solar panels
- It’s charged at least 75% by solar energy (new 2025 IRS clarification)
❌ No, if:
- The battery is standalone (not connected to solar)

Changes to the Solar Tax Credit in 2025
While the 30% credit remains intact until 2032, there are a few key updates:
1. Battery Eligibility Tightens – The IRS now requires batteries to be mostly solar-powered (75%+) to qualify.
2. Direct Pay for Nonprofits & Government – Tax-exempt entities can now receive the ITC as a cash refund.
3. Labor Costs Still Covered – Unlike some state incentives, the ITC still includes installation fees .
How to Claim the Solar Tax Credit in 2025
Claiming the ITC is simple:
1. Install your solar system (must be operational in the tax year you claim it).
2. Check eligibility: you must own (not lease) the solar system.
3. Get IRS Form 5695 and fill out Part I for residential solar.
4. Complete Schedule 3 & enter the credit amount on your Form 1040.
5. Keep receipts and manufacturer certifications in case of an audit.
Pro Tip: If your tax liability is less than the credit, the remaining amount rolls over to next year (e.g., a $10,000 credit with $7,000 liability leaves $3,000 for next year).
Maximizing Your Solar Tax Credit Savings
1. Install Before 2033
The credit drops to 26% in 2033—locking in 30% now saves thousands.
2. Add a Solar Battery
Pairing a battery like the Fortress Power eForce increases your credit-eligible system cost.
3. Combine with Rebates from Utility Company
Net metering- Get bill credits for excess solar energy sent back to grid.
4. Combine with State Incentives
Many states offer extra rebates, like:
- California’s SGIP ($200–$1,000 per kWh for batteries)
- New York’s NY-SUN ($0.20–$0.50 per watt for solar)
- Check DSIRE (https://www.dsireusa.org/) for local programs.
5. Finance with a HELOC or Solar Loan
Interest on solar loans isn’t covered by the ITC, but financing lets you claim the full 30% upfront.
Solar Tax Credit FAQ (2025 Edition)
Q: Can I claim the ITC if I buy solar in 2025 but install it in 2026?
A: No. The credit applies only to systems placed in service during the tax year.
Q: Does the ITC apply to ground-mounted solar?
A: Yes, as long as it’s for your home (not a commercial farm).
Q: What if I don’t owe enough taxes to use the full credit?
A: The unused portion rolls over to future years (up to 5 years).
Q: Can I claim the ITC for a DIY solar installation?
A: Yes, but only for equipment costs (labor isn’t eligible unless you hire a contractor).
In a nutshell: Act Now to Save 30% on Solar in 2025
The federal solar tax credit is the single biggest discount available for U.S. homeowners going solar. With the credit locked at 30% through 2032, there’s never been a better time to invest in solar panels and battery storage.
Don’t wait—explore www.ecovault.com to start your solar adventure!