Solar & Energy Tax Credits 2026
Put solar panels on your roof or upgraded your home's efficiency this year? Uncle Sam may owe you a sizable credit — up to 30% of the cost for solar, with no cap. Here's what qualifies and how to claim it.
Solar credit
30%
No dollar cap
Good through
2032
Then steps down
Type
Credit
Dollar-for-dollar
Covers
Panels + batteries
Plus heat pumps, etc.
The 30% Clean Energy Credit
The big one is the Residential Clean Energy Credit: a 30% credit on the cost of qualifying clean-energy property, with no dollar limit. That includes:
- Solar panels and solar water heaters.
- Battery storage (even without solar).
- Certain geothermal heat pumps and small wind systems.
A $20,000 solar installation gets a $6,000 credit. The 30% rate runs through 2032, then steps down — so there's still time, but the best rate is now.
See your income picture
Understand your tax situation before claiming credits.
Efficiency Improvements (Windows, Heat Pumps)
A separate credit — the Energy Efficient Home Improvement Credit — covers smaller upgrades, each with its own annual cap:
- Heat pumps and certain efficient HVAC — up to $2,000 per year.
- Windows and doors — a combined annual cap (in the hundreds).
- Insulation — up to $1,200 per year.
These are more modest, but they stack with the big solar credit if you did both.
Credit vs Deduction: Why It's Better
A credit reduces your tax bill dollar for dollar — a $6,000 credit means $6,000 less tax. A deduction only reduces your taxable income, so at a 22% bracket a $6,000 deduction saves just $1,320. That's why these credits are so valuable: they're a direct refund of your spending, not a discount on your income.
How to Claim It
Claim the credits on Form 5695 when you file. Keep your invoices and manufacturer certification statements — the IRS can ask for proof that the equipment met the efficiency requirements. If the credit is bigger than your tax for the year, the solar credit can carry forward to future years (the efficiency credit generally cannot).
Frequently Asked Questions
Does the solar credit apply to rentals or second homes?
The residential credit is for your main home (and, for solar, a second home you live in — not a rental). Business or rental installations have different rules.
What if my credit exceeds my tax bill?
The clean energy (solar) credit can carry forward to future years. The efficiency credit is generally non-refundable and can't carry forward — so it's "use it or lose it" in that year.
Are these credits refundable?
No — they're non-refundable, meaning they reduce your tax but won't produce a refund beyond your liability. The solar credit can carry forward, but it won't turn into cash if you owe no tax.
Can I claim both the solar and efficiency credits?
Yes, they're separate credits covering different property. If you installed solar and new windows in the same year, you can claim both.
Sources
- IRS — Residential Clean Energy Credit (30%).
- IRS — Energy Efficient Home Improvement Credit.
- IRS Form 5695 instructions.
Credit rates and caps are subject to change. This is informational, not tax advice — verify current rules with the IRS.