What is 30% Solar Tax Credit and How to Apply?

Contents

• What is the Residential Clean Energy Credit?
• What Is Tax Credit?
• What Is Tax Liability?
• What Types of Renewable Energy Systems Qualify for This Credit?
• Anker Solix Products That Qualify for the Residential Clean Energy Credit
• Who Can Qualify for the Residential Clean Energy Credit?
• What Documents Should You Prepare?
• How to Claim the Residential Clean Energy Credit? 
• Final Thoughts
• FAQ

Disclaimer: * Before going through this page, please keep in mind that the information provided here is solely for educational purposes and shall not be construed as legal, tax, regulatory, or financial advice. Given that individual circumstances may differ, Anker SOLIX cannot guarantee, assure, or make any claims regarding the availability of tax credits, deductions, or other similar benefits in relation to any of our products. We highly recommend that you consult your own tax advisor to understand how this credit may apply to your personal or professional tax situation.

As concerns about climate change continue to rise, more homeowners are seeking sustainable energy solutions to reduce their environmental impact. By installing renewable energy systems, homeowners can generate their own electricity, reducing reliance on the grid and lowering energy bills in the long term.

To encourage more homeowners to adopt renewable energy systems, the U.S. government introduced the Residential Clean Energy Credit, providing a 30% tax credit on the installation costs of eligible clean energy systems like solar panels, wind turbines, and more. 

Are you considering installing solar panels or other clean energy systems? Or have you recently installed solar panels on your roof? Check out this article now! Here, you’ll learn about the Residential Clean Energy Credit, and how to take advantage of the 30% federal solar tax credit. Anker SOLIX offers solar panels and solar generators that qualify for this credit. Get started now to learn more! 

What is the Residential Clean Energy Credit?*

The Federal Solar Tax Credit or Residential Clean Energy Credit is a federal tax incentive implemented by the United States government. It allows a taxpayer in the U.S. with a private residence to claim 30% of the cost of installing new, qualified clean energy systems for their home, such as solar electric panels, wind turbines, solar water heaters, fuel cells, geothermal heat pumps, and battery storage technology.

This incentive directly deducts the amount of taxes you owe to the federal government by offsetting a portion of your federal income tax liability. Instead of just reducing your taxable income, this credit is subtracted dollar-for-dollar from the total amount of tax you owe.

The credit is non-refundable, which means that it can only be used to reduce the amount of taxes owed in the taxable year. If the credit exceeds your tax liability, you can carry forward the unused portion to future taxable years.

Here is an example to help you understand it clearly:

You are a taxpayer, and own a residence where you live most of the time in the United States. You installed a solar panel system in your residence in 2024. The total cost of the solar system is $20,000. Qualifying for the 30% Residential Clean Energy Credit, you can claim $6,000 ($20,000 x 0.30) as a federal tax credit.

When you file your taxes for the year, you find that you owe $7,000 in federal income tax. By applying the solar tax credit, your tax liability is reduced to $1,000 ($7,000-$6,000).

If your tax liability is less than $6,000, say $4,000, the credit will reduce your tax liability to $0 for the current tax year, and you can carry forward the remaining $2,000 of unused credit to apply toward next year’s tax liability.

When is Residential Clean Energy Credit available?*

The Residential Clean Energy Credit, extended under the Inflation Reduction Act of 2022, is available for residential energy installations, with credit percentages varying across different years. Below is a timeline and corresponding credit percentage:

Activation Year	Credit Percentage
2017-2019	30%
2020-2021	26%
2022-2032	30%
2033	26%
2034	22%

This data is sourced from the U.S. Code, accessible at uscode.house.gov.

What Is Tax Credit?*

To understand the incentive, let’s start with the tax credit first.

A tax credit is a dollar-for-dollar reduction in the amount of tax owed. It directly decreases the total tax liability, making it a powerful tool for reducing your tax bill. Tax credits are typically offered for specific purposes, like encouraging education, clean energy usage, or childcare expenses. For instance, if you qualify for a $1,000 tax credit and owe $5,000 in taxes, your tax liability reduces to $4,000.

Tax Credit vs. Tax Deduction vs. Tax Rebate*

Tax Credit:

1. Directly reduces tax liabilityon a dollar-for-dollar basis.
2. Types include nonrefundable credits(up to the tax liability amount) and refundable credits(excess credited back as a refund).
3. Example: Child Tax Credit, earned income credit.

Tax Deduction:

1. Reduces taxable incomerather than tax owed.
2. Lowers the portion of income subject to tax, which indirectly reduces the tax bill.
3. Common deductions include mortgage interest, charitable contributions, and student loan interest.

Tax Rebate:

1. A refund or partial return of taxes paid, often issued after filing a tax return.
2. Sometimes offered as an incentive or to support taxpayers meeting specific criteria.
3. Example: Stimulus rebates during economic downturns or special government relief packages.

What Is Tax Liability?*

Tax liability is the total amount of tax owed by an individual, business, or other entity to the government based on income, investments, or other taxable activities. In the U.S., tax liability typically includes federal, state, and sometimes local taxes.

For individuals, federal income tax liability depends on which tax bracket they fall into, based on their taxable income. The U.S. uses a progressive tax system, meaning the tax rate increases as income rises.

Here are the federal tax brackets in 2024:

Tax Rate	Single Filer	Married Filing Separately	Married Couples Filing Jointly	Head of Household
10%	Up to $11,600	Up to $11,600	Up to $23,200	Up to $16,550
12%	Over $11,600	Over $11,600	Over $23,200	Over $16,550
22%	Over $47,150	Over $47,150	Over $94,300	Over $63,1000
24%	Over $100,525	Over $100,525	Over $201,050	Over $100,500
32%	Over $191,950	Over $191,950	Over $383,900	Over $191,950
35%	Over $243,725	Over $243,725	Over $487,450	Over $243,700
37%	Over $609,350	Over $365,600	Over $731,200	Over $609,350

The data is sourced from: Tax Computation Worksheets for 2024 in IRS Publication 505 (2024)

Here are the federal tax brackets in 2025:

Tax Rate	Single Filer	Married Filing Separately	Married Couples Filing Jointly	Head of Household
10%	Up to $11,925	Up to $11,925	Up to $23,850	Up to $17,000
12%	Over $11,925	Over $11,925	Over $23,850	Over $17,000
22%	Over $48,475	Over $48,475	Over $96,950	Over $64,850
24%	Over $103,350	Over $103,350	Over $206,700	Over $103,350
32%	Over $197,300	Over $197,300	Over $394,600	Over $197,300
35%	Over $250,525	Over $250,525	Over $501,050	Over $250,500
37%	Over $626,350	Over $375,800	Over $751,600	Over $626,350

 

The IRS has released tax inflation adjustments for the 2025 tax year. Check the details in Revenue Procedure 2024-40 

What Types of Renewable Energy Systems Qualify for This Credit?*

According to the Instructions for Form 5695, here are different types of renewable energy systems that qualify for the credit:

1. Solar Electric Panels

Qualified Solar Electric Property Expenditure: This includes the costs for solar energy systems that generate electricity for use in your home located in the U.S. Notably, solar panels and certain solar roofing tiles or shingles, which serve both as traditional roofing and solar electric collectors, can qualify for the credit, even if they are a structural component of the home.

Qualification: The solar panels and related equipment must be installed on a residential property owned and used as a primary or secondary home in the U.S.

Individuals who qualify: The house must be located in the United States and serve as the taxpayer's residence.  

2. Battery Storage Technology

Qualified Battery Storage Technology Expenditure: This includes costs for battery storage systems installed in connection with a U.S. residence.

Qualification: The battery must have a storage capacity of at least 3 kilowatt-hours and be used to store energy for residential purposes.

Individuals who qualify: The house must be located in the United States and serve as the taxpayer's residence.

3. Solar Water Heaters

Qualified Solar Water Heating Property Expenditure: Costs related to systems that heat water using solar energy qualify for the credit. What’s more, the solar roofing tiles and shingles that both collect solar energy and serve as structural roofing components are eligible.

Qualification:

• At least half of the energy used for heating is from the sun.
• The solar water heating property must be certified by the Solar Rating Certification Corporation or a similar state-endorsed entity to meet performance standards.

Individuals who qualify: The house must be located in the United States and serve as the taxpayer's residence.

4. Wind Turbines

Qualified Small Wind Energy Property Expenditure: This includes costs for wind turbines that generate electricity for residential use.

Individuals who qualify: The house must be located in the United States and serve as the taxpayer's residence.

5. Geothermal Heat Pumps

Qualified Geothermal Heat Pump Property Expenditure: Expenses for qualified geothermal heat pumps installed on or in connection with your home in the U.S. are eligible.

Qualification:

• The geothermal heat pumps must meet the Energy Star requirements in effect at the time of purchase.
• The system uses the ground or groundwater. It can work as a thermal energy source to heat your home or serve as a thermal energy sink to make it cool.

Qualified homeowners: The house must be located in the United States and serve as the taxpayer's residence.

6. Fuel Cells

Qualified Fuel Cell Property Expenditure: This includes costs for fuel cell systems installed in or in connection with your primary home located in the U.S.

Qualification:

• The fuel cell system must have at least a half-kilowatt of capacity and an efficiency of over 30% when generating electricity alone.
• A qualified fuel cell system consists of a fuel cell stack and associated components that convert fuel into electricity through an electrochemical process.

Individuals who qualify: The property must be within the United States and serve as the taxpayer’s primary residence.

Anker Solix Products That Qualify for the Residential Clean Energy Credit*

Anker Solix Battery Storage Systems

According to IRS Form 5695, “Qualified battery storage technology costs are costs for battery storage technology that is installed in connection with your home located in the United States and has a capacity of at least 3 kilowatt hours.” (IRS 2023 Instructions for Form 5695)

Anker battery storage products with a minimum capacity of 3 kilowatt-hours, designed to store solar-generated energy for later residential use, qualify for the credit. These systems must be installed in connection with a home in the U.S. and meet efficiency guidelines outlined in the tax code.

Here are relevant Anker solar panel product recommendations as follows. AnkerSOLIX also offers more bundle products that meet the standards with storage capacities of over 3kWh.

Anker SOLIX F3800 Solar Generator + 400W Solar Panel

Paired with a 400W solar panel, the Anker SOLIX F3800 Solar Generator bundle is a user-friendly backup power solution for your home, perfect for handling energy needs during outages.

• High Power Output: Delivers a robust 6,000W at 120V/240V split-phase in a single unit, ideal for running large appliances.
• Flexible Capacity Expansion: Start with a 3.84kWh capacity, expandable up to 26.9kWh by connecting up to 6 SOLIX BP3800 batteries.
• Scalable Power: Scale up to 12kW, totaling 53.8kWh, to stay powered even in prolonged outages.
• Fast Solar Charging: Utilize up to 2,400W of solar input for a quick recharge from 0 to 80% in only 1.5 hours using sunlight.
• EV and RV Compatibility: Equipped with NEMA 14-50 and L14-30 outlets, you can charge your EV or RV directly.
• Smart Monitoring: Manage and monitor your energy usage through Anker app, using Bluetooth or Wi-Fi connectivity for added convenience. 

Anker SOLIX F3800 + Home Backup Kit (Transfer switch)+ 400W Solar Panel

The Anker SOLIX F3800 + Home Backup Kit serves as a seamless backup power solution for your home, with plug-and-play capability for easy setup..

• Robust Power Output: Delivers a powerful 6,000W split-phase output at 120V/240V, allowing you to run high-demand appliances effortlessly.
• Expandable Energy Capacity: Starting at 3.84kWh, you can extend the capacity up to 26.9kWh by integrating up to six Anker SOLIX BP3800 expansion batteries.
• Fast Solar Recharging: With a 2,400W solar input, the SOLIX F3800 can be recharged from 0 to 80% in as little as 1.5 hours when exposed to sunlight.
• Household Compatibility: Supports charging home appliances like a microwave, fridges, TV, and electronic tools like chainsaws, jackhammers, laptops, and EV, RVs, etc.
• Smart Energy Management: Monitor and control your power usage directly from your smartphone using the intuitive app, which connects via Bluetooth and Wi-Fi.
• Long-Lasting Usage: Powered by Anker’s innovative InfiniPower™ technology, it ensures a durable and long-lasting 10-year lifespan, backed by a 5-year warranty.

Anker SOLIX F3800 + Smart Home Power Kit + 2 × 410W Rigid Solar Panel

The Anker SOLIX F3800 Home Power System is a comprehensive power solution designed to keep your home running smoothly, even during unexpected outages.

• Seamless Solar Integration: Integrate the SOLIX F3800 to your home’s energy system with existing solar panels, and unit the grid power and rooftop solar energy effortlessly.
• App Control: Through the Anker app, you can manage energy flows, track savings, and control battery usage, with modes like Self Consumption and Time-of-Use.
• Automatic Backup Power: Back up power for all home appliances, including LED bulbs, microwaves, fridges, coffee makers, TV, laptops, EVs, and RVs.
• High Power Output: The SOLIX F3800 delivers up to 12,000W, capable of handling the whole home power devices at once.
• Dynamic Adjustment: If severe weather is forecasted, the battery can automatically switch power instantly.

Anker Solix Solar Panels

According to IRS Form 5695, “Qualified solar electric property costs are costs for property that uses solar energy to generate electricity for use in your home located in the United States. Solar roofing tiles and solar roofing shingles can qualify for the credit.” (IRS 2023 Instructions for Form 5695)

Anker solar panels generate electricity from solar energy and can be installed in a residential property in the U.S. To qualify for the credit, the system must meet the applicable efficiency standards. 

Anker 410W Rigid Solar Panel

The Anker 405W Rigid Solar Panel is an industry-leading solar power solution designed to harness maximum sunlight energy for your home.

• Top-tier Solar Conversion Efficiency: With a high-efficiency conversion rate of up to 23%, it captures more sunlight for reliable energy output.
• Modern Design Aesthetic: The solar panel’s sleek, all-black finish complements a variety of architectural styles, seamlessly blending into any home exterior.
• Weather Resistance: The IP68 rating ensures durability against dust, rain, and extreme weather, making it dependable year-round.
• Long-Term Performance Assurance: Backed by a robust 10-year warranty and a 25-year linear performance guarantee, it promises years of sustainable power and peace of mind.

Who Can Qualify for the Residential Clean Energy Credit?*

To be eligible for the Residential Clean Energy Credit, you must meet certain conditions related to your residence and the type of energy improvements you make. Here are the main eligibility criteria:

Requirements for Residence:*

• It must be located in the United States and be the place where you live most of the time. The credit applies to both new and existing homes.
• While landlords cannot claim the credit for rental properties, homeowners may be able to claim the credit for a second home in the U.S. that is used part-time and not rented out.
• For qualified solar electric panels, solar water heaters, wind turbines, and geothermal heat pumps, the residence doesn’t have to be your main home. However, fuel cell property does not qualify for second homes.
• Your main home can be a house, mobile home, condominium, cooperative apartment, manufactured home, or houseboat that meets the Federal Manufactured Home Construction and Safety Standards.
• If your home is used partially for business purposes, you may still qualify for the credit, but the amount will depend on how much of the home is used for business. Homes with up to 20% business use can claim the full credit, while homes with more than 20% business use will receive a credit based on the non-business portion of the expenses. If your home is solely for business use, you cannot qualify for the credit.

Other Requirements:*

• Federal Tax Liability: Since the Residential Clean Energy Credit is a tax credit, you need to owe federal income taxes to take advantage of it. If your tax liability isn’t large enough to cover the full credit in one year, the remaining balance can be carried over to future years until the credit expires. Those with no federal income taxes will not benefit from this credit.
• New System Requirement: The energy system must be brand new or used for the first time. Pre-owned or refurbished systems are not eligible. Only new equipment, such as solar panels or other qualified energy installations, can qualify.
• System Ownership: You must own the energy system you’re installing. If you purchase the solar panels outright or finance them (as in taking out a loan to purchase them), you are eligible to claim the credit. Individuals who lease systems, such as solar panels, are not eligible for the credit.
• Installation Costs: Eligible expenses may include labor costs related to the system’s installation, such as site preparation, assembly, and wiring or piping needed to connect the system to your home. While traditional building materials like roof trusses and regular shingles that primarily serve a structural purpose do not qualify, solar-specific components such as solar roofing tiles and solar shingles are eligible, as they contribute directly to energy generation. 

What Documents Should You Prepare?*

When preparing to claim the Residential Clean Energy Credit, it's essential to gather all necessary documentation to ensure a smooth process. Below is a list of the key documents you should have ready:

The primary documents you’ll need to submit to claim the Residential Clean Energy Credit are:

• Form 5695: You’ll need to complete and submit IRS Form 5695 when you file your taxes. This form calculates the total amount of credit you’re eligible for and includes details about your clean energy installations.
• Form 1040: Form 1040 is the main document you’ll submit when filing your federal income taxes. The completed Form 5695 is attached to this document to report the credit.

In addition to these forms, you may need the following supporting documentation:

• Receipts and Invoices: Gather all receipts and invoices for the purchase and installation of qualified clean energy property. These must clearly indicate the type of equipment installed, the costs involved (including labor), and the installation date. Eligible equipment includes solar panels, wind turbines, geothermal heat pumps, fuel cells, and battery storage technologies.
• Manufacturer’s Certification: Some clean energy products may require a manufacturer’s certification stating that the product qualifies for the Residential Clean Energy Credit. Make sure to keep a copy of this certification, which is usually available from the manufacturer.
• Homeownership and Installation Records: Be prepared to provide proof that the property is your primary residence or qualifies as a second home where improvements were made. If you belong to a cooperative housing association, you’ll need documents showing your proportionate share of the total costs.
• Utility or Public Subsidy Documentation: If you received rebates or subsidies from a utility company or government agency for the installation, these amounts must be deducted from the claimed costs. Keep records of these subsidies to adjust your credit calculation properly.

How to Claim the Residential Clean Energy Credit?* 

Here are simplified steps to guide you through the whole process of claiming the Residential Clean Energy Credit: 

Step 1: Confirm Your Eligibility

First, ensure that both your property and the energy system you plan to install meet the requirements. The property must be within the U.S. and can be either a new or existing home. The clean energy systems that qualify include solar electric panels, solar water heaters, wind turbines, fuel cells, and battery storage technology.

Step 2: Purchase and Install the System

Once you've confirmed eligibility, proceed to purchase and install your clean energy system. After the installation is complete and the system is fully operational, you can begin the process of claiming the Residential Clean Energy Credit.

Step 3: Keep Your Documentation

Though you're not required to submit documentation with your tax return, it's wise to keep your purchase and installation records. In the event of an audit or if you later sell the property, this information will be necessary.

Step 4: File Form 5695 and Form 1040

Download Form 5695 and Form 1040 from the IRS website. You can also fill them out online and print them.

Form 5695 is specifically for claiming the Residential Clean Energy Credit, while Form 1040 is your standard individual tax return.

When filing your taxes for the year in which you installed the clean energy system, complete and submit both forms. 

If you are also claiming the Energy Efficient Home Improvement Credit, be sure to complete the corresponding section on Form 5695. (As Form 5695 includes two parts: Part I Residential Clean Energy Credit and Part II Energy Efficient Home Improvement Credit.)

Step 5. Submit with Tax Return

After completing the form, submit it along with your regular tax return. If the credit exceeds your tax liability, the unused portion may be carried forward to the next tax year, depending on specific rules.

Note: To claim the Residential Clean Energy Credit, be sure to complete your solar system installation within the tax year.

By following these steps, you can effectively claim the Residential Clean Energy Credit and reduce your tax liability while contributing to a more sustainable future.

Can the Residential Clean Energy Credit Be Combined with Other Incentives?

Yes, the Residential Clean Energy Credit can be combined with other federal, state, and local incentives, allowing homeowners to significantly reduce their overall investment in renewable energy systems. This credit offers a 30% reduction on the cost of eligible clean energy installations like solar panels and wind turbines. By combining it with state-level incentives or utility rebates, homeowners can maximize their savings.

However, it's important to note that some incentives may impact the calculation of the Residential Clean Energy Credit. For instance:

• Public utility subsidies for purchasing or installing clean energy systems are considered a "purchase-price adjustment." These subsidies must be subtracted from your total qualified property expenses before calculating the federal credit. This applies whether the utility provides the subsidy directly to you or to a contractor on your behalf.
• State and local rebates may also need to be subtracted from qualified expenses if they are linked to the purchase price of the property (e.g., provided by manufacturers, distributors, sellers, or installers). However, not all state energy efficiency incentives qualify as rebates under federal tax law. Some labeled as "rebates" may not actually reduce the qualified costs for the credit, depending on how they are structured.
• Net metering credits—payments or credits received from selling energy back to the grid—do not affect the calculation of the Residential Clean Energy Credit and do not need to be subtracted from your qualified expenses.

In addition to these considerations, homeowners can also combine the Residential Clean Energy Credit with the Energy Efficient Home Improvement Credit, which provides up to $1,200 annually for upgrades like insulation or energy-efficient windows. Combining these credits with other incentives allows homeowners to significantly reduce both upfront costs and long-term energy expenses, making renewable energy systems more affordable. 

Final Thoughts*

The Residential Clean Energy Credit offers a valuable opportunity for homeowners to invest in renewable energy systems while reducing their overall tax liability. Now that, you have understood the eligibility criteria, the types of systems that qualify, and how to properly file for the credit. It is time to make significant strides toward a greener and more sustainable home.

Consider Anker Solix products for renewable solar energy solutions, offering a wide range of solar panels and solar generators that qualify for the 30% Residential Clean Energy Credit. Get started on the path to a sustainable future now!

This credit empowers households to adopt clean energy solutions that not only decrease carbon footprints but also make renewable energy more accessible and affordable. As you move forward, be sure to consult a tax advisor to maximize your credit benefits and align this incentive with your broader financial and environmental goals.

FAQ*

Can I claim residential energy credit more than once?

Yes, you can claim the residential energy credit more than once. There is no lifetime limit on residential clean energy credits. The limits are applied on a yearly basis, allowing you to claim credits for qualifying improvements in multiple years. You can continue to claim the credit each year that you install new eligible energy-efficient upgrades, such as solar panels or energy-saving home improvements.

Does the residential clean energy credit carry over?

Yes, the residential clean energy credit can carry over. If the credit exceeds your tax liability for the year, the unused portion can be carried forward to future tax years. This means you can apply the remaining credit to your tax bill in subsequent years until it is fully used, providing long-term benefits for homeowners who invest in clean energy improvements.

Can the Solar Tax Credit Be Combined With Other Solar Incentives?

Yes, applying for the Residential Clean Energy Credit does not prevent you from applying for other solar incentives.

For example, California, Florida, and Texas are typical cases. Many states, local governments, and utility companies also offer incentive programs to encourage people to switch to solar energy.

Do you need receipts for Form 5695?

No, you don't need to submit receipts with Form 5695 when filing your tax return. However, it is crucial to keep detailed records and receipts for any energy-efficient improvements made to your home in case of an audit. These documents should include the cost, installation details, and proof that the improvements meet the IRS’s eligibility requirements for tax credits.