Go solar now and take advantage of the federal incentive that covers up to 30% of your system costs. The credit expires soon — act today to secure your savings, lower your energy bills, and protect your home before the next storm season.
How the Federal Solar Tax Credit Works
The Federal Solar Tax Credit (ITC) is a government incentive that lets you deduct 30% of the cost of your solar system from your federal taxes. This credit applies to the total price of your installation—including equipment, labor, and permitting fees—making solar power much more affordable.
For example, if your system costs $20,000, you could reduce your tax bill by $6,000.
Benefits of Acting Now
By installing solar today, you lock in the full 30% federal tax credit before any potential future reductions. Every year you wait means higher energy costs, missing out on thousands in tax savings, and delaying your return on investment. Acting now ensures maximum savings and faster payback while energy prices continue to rise.
Why Solar Makes Sense in Texas
Texas enjoys abundant sunshine—most areas receive 5.5 to 6.5 peak sun hours per day, with El Paso leading the pack. Even cities like San Antonio and Austin get around 5.4 hours daily. This translates to robust solar production and strong return potential.
Texas electricity rates often range between $0.12–$0.17 per kWh, making solar-generated power comparatively cheap and attractive to homeowners.
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Typical system cost: $2.50–$3.50/W. For an 8 kW system, that’s $20,000–$28,000 before incentives.
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After the 30% federal tax credit, net cost falls to around $14,000–$20,000.
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Texas also offers a 100% property tax exemption on the added value from a solar system—so it boosts your home value without increasing your property taxes.
Homeowners in Texas typically see payback periods between 6 to 12 years, depending on system size, location, and usage patterns.
Solar homes in Texas often sell faster and for more—typically adding around 3–5% to home value without increasing property tax liability.
Step-by-Step Guide
- Install eligible equipment.
New solar PV (and optional battery ≥3 kWh) installed at a U.S. home qualifies; labor for onsite prep/installation and the wiring/piping to connect the system count toward the credit. Second homes can qualify; rentals you don’t live in do not. - Figure your qualified costs.
Start with the total invoiced amount (equipment + eligible labor). Subtract any utility subsidies or qualifying point-of-sale rebates that reduce the purchase price. (Net-metering bill credits don’t reduce your basis.) - Calculate the credit.
Multiply qualified costs by 30% for property installed between 2022–2025 - Choose the right tax year.
Claim the credit for the year the system is installed/placed in service (not when ordered). - File your taxes.
Complete IRS Form 5695 and include it with your Form 1040. The credit reduces your federal income tax owed (it’s nonrefundable). - If the credit is bigger than your tax bill…
Carry forward any unused amount to future years until it’s used up. - Keep records.
Save contracts, paid invoices, and equipment/manufacturer certifications in case the IRS asks for documentation.
FAQs
To claim the 30% ITC on your federal taxes, you’ll need:
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Invoice/contract from your solar installer showing total cost (equipment, labor, permitting).
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Proof of payment (receipt, canceled check, financing documents).
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System certification (if provided, confirming it qualifies for federal credit).
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Form 5695 (Residential Energy Credits) filed with your federal tax return.
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You must own the system (leased systems don’t qualify).
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It must be installed on your primary or secondary residence in the U.S.
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Installation must be completed in the tax year you claim the credit.
- Gather invoices, proof of payment, and installation details.
- File IRS Form 5695 with your federal tax return.
- Enter the credit on Form 1040 (reduces your tax liability).
- If your credit is larger than your tax bill, the remainder can be carried over to the next year.
