Solar Tax Credit in 2026: How It Works and What Homeowners Need To Know
Written by
Andrew Lisa
Edited by
Joe Evans
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Installing solar panels can lower your energy bills for years — and the federal solar tax credit still helps cover the upfront cost in 2026. The credit, officially called the Residential Clean Energy Credit, lets eligible homeowners deduct a percentage of solar and battery costs directly from their federal tax bill.
Here’s a simple breakdown of how the solar tax credit works today, what’s stayed the same under recent legislation and how much you could save.
Solar Tax Credit at a Glance
What It Covers Credit Amount Who Qualifies Why It Matters Solar panels and battery storage 30% of eligible costs Homeowners with a primary or second home Can reduce installation costs by thousands
What Is the Solar Tax Credit?
The solar tax credit lowers your federal income taxes dollar for dollar based on what you spend installing a qualifying clean energy system.
According to the Internal Revenue Service, the credit currently equals 30% of eligible solar and battery costs and applies to systems placed in service through 2034.
If your credit is larger than your tax bill for the year, you can usually carry the unused portion forward to future tax years.
What Changed for 2026?
For most homeowners, nothing major changed.
Current law keeps the credit stable and predictable:
- The 30% credit remains available through 2034
- Battery storage systems qualify, even if installed without solar panels
- Unused credits can still be carried forward
- The credit applies to primary and secondary homes, not rental-only properties
The IRS confirms that standalone battery storage systems now qualify for the credit, which expanded eligibility for homeowners adding energy storage later.
How Much Can the Solar Tax Credit Save You?
Your savings depend on how much your system costs.
Quick Example:A $30,000 solar and battery system ?– 30% credit = $9,000 off your federal tax bill
The U.S. Department of Energy reports that the average residential solar installation cost in the U.S. ranges in the tens of thousands of dollars, meaning the credit often delivers four-figure savings.
What Costs Qualify?
Most solar-related expenses count, including:
- Solar panels and related equipment
- Inverters and mounting hardware
- Electrical wiring and system components
- Installation and labor
- Battery storage systems
The IRS specifically excludes costs that aren’t directly related to solar energy generation, like unrelated roof repairs.
Who Can Claim the Solar Tax Credit?
You generally qualify if:
- You own the solar or battery system
- It’s installed at a U.S. home you own
- The home is a primary or secondary residence
- The system is new and placed in service during the tax year
According to the U.S. Energy Information Administration, owner-occupied homes make up the vast majority of residential solar installations nationwide.
How Long Will the Credit Last?
Under current law:
- 30% credit: Through 2034
- 26% credit: 2035
- 22% credit: 2036
- Ends: 2037 unless extended
This phase-down schedule is written directly into federal statute, providing homeowners with long-term planning certainty.
How To Claim the Solar Tax Credit
You claim the credit by filing IRS Form 5695 with your federal tax return. The credit then reduces what you owe on your Form 1040.
If you can’t use the full credit in one year, the IRS allows you to carry it forward until it’s fully used.
Is the Solar Tax Credit Refundable?
No. The credit can lower your tax bill to zero, but it won’t create a refund. Carry-forward rules help you use any leftover credit later.
Final Take to GO
The solar tax credit in 2026 remains one of the most valuable incentives for homeowners going solar.
With a clear 30% rate, expanded battery eligibility and years left before any phase-down, it continues to make solar more affordable — especially for homeowners planning long-term energy savings.
Solar Tax Credit FAQ
- Is the solar tax credit still available in 2026?
- Yes. Eligible homeowners can still claim a 30% federal tax credit for qualified solar and battery installations.
- Do batteries qualify for the solar tax credit?
- Yes. Battery storage systems qualify even if they are installed without solar panels.
- Can I claim the credit if I finance my solar system?
- Yes. Financing does not affect eligibility as long as you own the system.
- What happens if my credit is larger than my tax bill?
- You can usually carry the unused portion forward to future tax years.
- Does the credit apply to second homes?
- Yes. The solar tax credit applies to both primary and secondary residences you own.
Information on promotions is accurate as of 1/12/26.
Our in-house research team and on-site financial experts work together to create content that’s accurate, impartial, and up to date. We fact-check every single statistic, quote and fact using trusted primary resources to make sure the information we provide is correct. You can learn more about GOBankingRates’ processes and standards in our editorial policy.
- IRS "Residential Clean Energy Credit"
- IRS "Frequently asked questions about energy efficient home improvements and residential clean energy property credits – Energy Efficient Home Improvement Credit - General questions"
- U.S. Department of Energy "Solar Soft Costs Basics"
- IRS "About Form 5695, Residential Energy Credits"
- U.S. Energy Information Administration "Solar explained"
- U.S. Department of Energy Office of Energy Efficiency and Renewable Energy "Homeowner’s Guide to the Federal Tax Credit for Solar Photovoltaics"
- IRS "Instructions for Form 5695 (2025)"
