@laurayoung411 wrote:
I would like to install new windows and solar panels. It looks like windows are covered under 25C and would be capped at 30%, but the max is $600 per year. If that's true it would only cover 30% of one or two windows... Solar Panels appear to be covered under 25D and capped at 30%... Is there also a yearly/lifetime max? Thanks!
Windows are in section 25C. For 2022, the credit is 10% of the cost up to $200. Starting in 2023, the credit is 30% of the cost up to a $600 annual maximum. Suppose doing all your windows would cost $4000. If you spend $4000 in 2023, your credit is $600. If you did half the windows in 2023 and half in 2024 for $2000 each year, you could claim a $600 credit in both years. But the credit is claimed when the windows are installed, not when they are paid for. You would actually have to spread the installations over time to claim the credit in more than 1 year, not just spread out the payments.
Solar electric is covered in section 25D. The credit is 30% of the cost, and is claimed on the date the panels are placed in service (installed, inspected and turned on) regardless of when you pay for them. Normally, you claim your system in the year it is installed. However, if you come back in the future to install more panels and make your system more powerful, you could claim a credit for the new part of the system in the year it was placed in service.
