Solar Tax Credit Remaining

[sportsman2492]

I installed a solar system on my home and started using the federal tax credit for my 2024 taxes. My taxes are low, and it will take many years to fully use the credit. Now that the credit is being phased out in 2026, I am wondering if I can sell the remaining amount of my credit. If not, is there any way around that? 

[AmeliesUncle]

No, the solar credit for your personal home is not able to be sold (although the business credit could have been eligible for that).

The unused credit will continue to carry forward until you use it up.  

While there are many factors involved, some people that have pre-tax retirement accounts, such Traditional IRAs, have converted them to a Roth account.  That is a taxable transaction creating more tax, but the solar credit would be used against that.  But as I said, there are many factors involved as to if that is in your best interest or not.

[Opus 17 · Accepted solution]

Even though new credits have been terminated, your prior credit will continue to carry forward until you use it up.

As mentioned, if you have retirement accounts, this might be a good opportunity to convert IRA or 401k funds to a Roth IRA or in-plan Roth 401k (if your employer offers that option).  That way you pay the tax on the money now, and do not have to pay more tax when you withdraw.

For example, in the typical middle class tax bracket of 22%, a $10,000 conversion will cost $2200 in taxes.  If you had a $10,000 solar credit to use up, you could convert $45,000 of pre-tax IRA or 401k funds to a Roth IRA or Roth 401k, and it would be basically tax-free, because it would go against the credit.