Guide to the Federal Solar Tax Credit for New Jersey Homeowners in 2024

The cost of a home solar panel installation can feel overwhelming, but solar incentives can make it more affordable. The federal solar tax credit, also known as the investment tax credit (ITC), reduces your upfront costs by 30 percent! 

What Is the Solar Tax Credit? 

The solar tax credit is a tax incentive that reduces the cost of rooftop solar panels. It was first introduced in 2005 and has been in effect since, but has gone through several iterations. In 2022, the tax credit was increased to 30% as part of the Inflation Reduction Act.  

• The solar tax credit directly reduces your federal tax liability for the year you install your solar panels. 
• In 2024, the solar tax credit is worth 30% of your solar installation costs.
• The 30% tax credit will be available until 2032, after which it will be gradually reduced until it expires in 2035.

How Does the Solar Panel Tax Credit Work? 

The solar ITC reduces your federal taxes owed by 30% of your solar system installation costs. Let’s say you install a $16,000 solar panel system. You would receive a tax credit worth 30% of $16,000, which is $4,800. You would then apply that credit to your federal taxes owed, bringing the total down. So, if you owed $5,000 in taxes, the credit would reduce your liability to $200. If your tax credit is worth more than you owe, you can roll the remainder over to the next year. 

Who Is Eligible for the Solar Tax Credit?

Most residential solar energy systems qualify for the federal solar panel tax credit. To be eligible for the ITC, you must: 

• Install solar panels at your primary or secondary residence in the United States 
• Own your solar panels (solar leases and Power Purchase Agreements do not qualify) 
• Install new equipment or equipment that’s being used for the first time (used solar equipment is not eligible) 

What Expenses are Eligible for the Solar Tax Credit? 

Almost all expenses related to a solar panel installation are eligible for the tax credit, including: 

• Solar panels 
• Solar batteries 
• Racking and wiring 
• Labor costs 
• Permitting fees

How to Claim the Solar Tax Credit 

You claim the solar tax credit when you file your federal tax return for the year you installed your solar energy system. It’s a simple process—just follow these steps. 

1. Save all receipts associated with your solar installation
2. Complete IRS Form 5695 Part 1 – Residential Clean Energy Credit 
3. Add your tax credit information to your typical IRS Form 1040 
4. Attach Form 5695 when you file 

Disclaimer: We’re solar experts, not tax experts. You should always consult your tax advisor before filing.

Start Your Solar Panel Installation in New Jersey 

The solar tax credit reduces your solar installation costs and sets you up for long-term savings with a solar energy system. NJ Solar Power has been the leading authority on solar energy in New Jersey since 2003 and we can help you get the best deal on solar. We offer the best products, installation, customer service, and warranty at a fair price and will help you take full advantage of the solar incentives available to maximize your return on investment. Our solar experts turn rooftops into energy generating machines that make you money! 

Save 30% on solar panels with the federal solar tax credit. Call 732-269-0308 or contact us to learn more.