topic Can someone explain in simple words how the Home Energy Credit works, what "carried forward is", and why I am only getting 15% of the full credit this return? in Deductions & credits

Can someone explain in simple words how the Home Energy Credit works, what "carried forward is", and why I am only getting 15% of the full credit this return?

brandon-hogue94- — Mon, 23 Feb 2026 10:13:42 GMT

I had solar panels installed on my house in the year 2022. My full Home Energy Credit is 30% of the amount for them. Of that 30% amount, I am only getting 15%, while the other 85% being carried forward. What exactly does that mean, and why not the full 30%?

Re: Can someone explain in simple words how the Home Energy Credit works, what "carried forward i...

CatinaT1 — Wed, 25 Jan 2023 19:26:08 GMT

This credit is a non-refundable credit. This means that it can lower your tax amount but not lower than zero. (Or increase your refund.)

Article on Form 5695

Re: Can someone explain in simple words how the Home Energy Credit works, what "carried forward is", and why I am only getting 15% of the full credit this return?

Opus 17 — Wed, 25 Jan 2023 19:48:41 GMT

The credit can't be more than your income tax liability. If you have not entered all your taxable income (maybe you don't have your W-2s yet), the credit will be recalculated when your income is updated.

Your income tax liability is the tax you owe to the IRS, regardless of withholding or refunds. For example, if you paid $4000 in withholding and expect a $1000 refund, your tax liability would be $3000. Likewise, if you paid $4000 in withholding and owe a further $1000 payment, your liability would be $5000. The solar credit can't be more than your tax liability, but if you update your income or tax, the credit will also be updated.