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How Many Years Can You Roll Over Solar Tax Credit?

Written by: Ryan Reid
Last updated: January 30, 2024

The Investment Tax Credit (ITC), also known as the Federal Solar Tax Credit, has been a cornerstone for the United States' renewable energy economy. This powerful financial incentive has been pivotal in making solar power more affordable for American homeowners and businesses. The ITC has been key in propelling the growth of solar installations across the country, encouraging a shift towards a more sustainable and eco-friendly energy source.

Explore how many years can you roll over Solar Tax Credit and understand how this powerful financial incentive is driving the United States' transition to a green energy future. Uncover the history, impact, and future of the Investment Tax Credit, and learn how you can benefit from it.

What Is The Solar Tax Credit?

The Solar Tax Credit is a federal tax credit that allows homeowners and businesses to apply a certain percentage of their solar energy system's cost as a credit to their federal tax bill. As of 2023, you can claim 30 percent of your solar energy system's cost as a tax credit, which remains available until 2033, at which point it will drop to 26 percent. The ITC applies to both residential and commercial systems, with no cap on its value​.

The History And Future Of The ITC

The ITC was initially established by the Energy Policy Act of 2005 and was set to expire at the end of 2007. However, the popularity and success of the ITC in supporting the United States' transition to renewable energy led Congress to delay its expiration multiple times. The most recent extension occurred in August 2022 as part of the Inflation Reduction Act, extending the ITC at 30 percent for 10 additional years, making it available to homeowners in some form through 2034​.

How Many Years Can You Roll Over Solar Tax Credit?

So, how many years can you roll over Solar Tax Credit? As long as you own your solar energy system, you are eligible for the solar investment tax credit. The brilliant aspect of the ITC is that it allows for rollovers. If you don't have enough tax liability to claim the entire credit in one year, you can "roll over" the remaining credit amount into future years as long as the tax credit is in effect, which is through 2034 for residential energy systems​​.

Eligibility For The Solar Tax Credit

Eligibility for the ITC is relatively straightforward. Here is a checklist to help determine if you qualify:

  • Your solar photovoltaic (PV) system was installed between January 1, 2006, and December 31, 2034.

  • Your solar PV system was installed on your primary residence or secondary residence in the United States.

  • For an off-site community solar project, the electricity generated is credited against and does not exceed your home's electricity consumption. The IRS allows a taxpayer to claim a section 25D tax credit for purchasing a portion of a community solar project.

  • You own the solar PV system, meaning you purchased it outright or financed it with a loan. You did not sign a lease or power purchase agreement (PPA)​.

The Impact Of The ITC On Solar Installations

The ITC has played a significant role in making solar power more accessible and affordable for many Americans. By reducing the cost of solar installations, the ITC has spurred growth in the solar industry, leading to an increase in the number of installations. This growth has not only contributed to a reduction in greenhouse gas emissions but has also created jobs and boosted local economies. The ITC's extension through 2034 is expected to further accelerate the transition to renewable energy in the United States.

The Role Of Solar Tax Credit In The Green Energy Transition

The Solar Tax Credit is a critical component of the broader movement toward green energy. By providing financial incentives for solar installations, the ITC encourages households and businesses to shift from fossil fuels to renewable energy sources. This transition is crucial in the fight against climate change. By rolling over the credit, the ITC allows more taxpayers to invest in solar technology, thereby increasing the country's overall solar capacity and reducing reliance on non-renewable energy sources.

Economic Benefits Of Solar Energy And The ITC

Investing in solar energy isn't just good for the planet - it's also a wise economic decision. By reducing the cost of solar installations, the ITC makes it more financially feasible for homeowners and businesses to switch to solar. Over time, these solar energy systems can generate significant savings on energy bills. Furthermore, the growth in solar installations has led to job creation in the renewable energy sector, providing an economic boost to communities across the country.

Frequently Asked Questions

Understanding “How many years can you roll over solar tax credit?” is crucial. To help provide more clarity on this, we have answered some of the most frequently asked questions regarding solar tax credits.

Can I claim the solar tax credit if I lease my solar system?

No, you cannot claim the solar tax credit if you lease your solar system or enter into a power purchase agreement (PPA) with a solar installer. The tax credit is only available to those who own their solar energy system, whether purchased outright or financed with a loan.

How long can I roll over the solar tax credit?

You can roll over the remaining credit amount into future years for as long as the tax credit is in effect. As of 2023, the tax credit is in effect through 2034 for residential energy systems.

What happens to the solar tax credit after 2034?

As per the current law, there will be no federal credit for residential solar energy systems starting from 2035. However, laws and policies can change, and it would be prudent to stay updated on the latest solar policy developments.

The Solar Tax Credit's Rollover

It’s important to understand how many years can you roll over Solar Tax Credit. The solar tax credit's rollover feature is a boon for taxpayers, making solar energy systems more affordable and accessible. By allowing taxpayers to claim the credit over multiple years, the ITC ensures that more individuals and businesses can take advantage of this benefit, leading to a broader adoption of renewable energy and a greener future for us all.

Learn more about how you can take advantage of the solar tax credit. Visit Gov Relations today to get the answers you need!

Ryan Reid
Ryan Reid is a dedicated social worker with a passion for improving the lives of vulnerable individuals and families in his community. With a bachelor's degree in Social Work from a reputable university, Ryan has spent over a decade working in various roles within the social services sector. His expertise lies in assessing the needs of at-risk populations, connecting them with essential resources, and advocating for their rights. Ryan's compassionate approach and unwavering commitment to social justice make him a trusted advocate for those in need of government assistance and support.
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