If you were one of the more than 1,900 Solar Champions to join our community last year, here’s a guide to the most important tax incentives available for your clean energy investment(s). Note that ReVision Energy does not provide tax advice and this is for informational use only; we strongly recommend you work with a professional tax preparer.

Solar (and Solar-Powered Battery) Tax Credit

Claim the solar tax credit by using form 5695 – https://www.irs.gov/pub/irs-pdf/i5695.pdf

You can claim a 26% tax credit (this credit has been extended and remains available through the end of 2022. It will drop to 22% in 2023) of the gross cost of the fully installed system, as it appears on our final invoice to you. You can claim the credit in the year in which the system was built and installed.

Batteries that are connected to a solar array and recharged by solar also qualify for this credit, per an IRS letter released in 2018 (https://www.irs.gov/pub/irs-wd/201809003.pdf)

Commercial Solar Investment Tax Credit, MACRS, Bonus Depreciation

Businesses can claim a tax credit structured similarly as the residential one, as well as MACRS and bonus depreciation, but it’s (naturally) more complex than filing as a residence. See Form 3468 (https://www.irs.gov/pub/irs-pdf/i3468.pdf) and Form 4562 (https://www.irs.gov/pub/irs-pdf/f4562.pdf)

EV Charging Tax Credit

In December 2020, US Congress extended a residential tax credit for up to 30% rebate (capped at $1,000 for residential and at $30,000 for commercial) on the installation of EV charging stations, applied retroactively, through the end of 2021. This means that if you had us install an EV charging station last year, you may be eligible for this credit, and also, if you installed in previous years and did not apply for this credit, you may be eligible to submit an amended return and receive it now.

See: https://afdc.energy.gov/laws/10513

And: https://www.irs.gov/forms-pubs/about-form-8911

(Note, there is also a tax credit for buying an electric vehicle!)

Heat Pump Tax Credit

As part of the same action that extended the EV Charging equipment tax credit, Congress also extended a retroactive $300 tax credit for heat pumps, under the EnergyStar program.

This one is slightly more complex in that the credit has been available for a while and applies to multiple technologies, and has a $500 lifetime cap. So if you’ve made many energy improvements (even it for a home you no longer live in) you may have used it already… however it’s certainly worth your time to see if you qualify!

https://www.energystar.gov/about/federal_tax_credits/non_business_energy_property_tax_credits

Many heat pump water heaters also qualify for a $300 rebate under this program. Somewhat confusingly, the cap is $500. So say you have (1) qualifying heat pump, and (1) qualifying water heater, you do not receive $300 + $300 = $600, but instead $500.

Incentives in place for 2021!

If you weren’t able to go solar in tax year 2020, there are lots of reasons to make the move in 2021. Between the significant extension of federal tax incentives, and incentives for complementary EV and heat pump technology, there are many financial reasons backing up the environmental case to transition to clean energy.