Solar Credits

[paulorco]

Hello, we just had solar panels installed this year. If our tax liability this year is bigger than the solar tax credits, will we get a refund that is equal to the 30% of the solar installs?

[KarenL4]

Hi, Paulorco,

Yes, you will get your tax liability reduced (and likely get a refund up to your taxes paid in) by the amount of the solar tax credit IF your tax liability is bigger than the solar tax credit.  However, if your tax liability is smaller than the solar credits, you can only reduce your tax liability to zero in the current year. 

Said differently, the Residential Clean Energy Credit is non-refundable meaning that it can offset your income tax liability dollar-for-dollar, but any excess credit won’t be refunded. You can carry that unused credit forward, though, and that will help you in future years. 

I like this article, which explains more.  I hope you like it too!

Please give a thumbs up to cheer below if this answer helps!

Best,

Karen

[mbpeddie]

Hi Paul,

Congrats on taking the steps to make your home more energy efficient.

When you purchase solar equipment or certain wind turbines for your home and have tax liability, you generally can claim the Residential Clean Energy Credit to lower your tax bill. This non-refundable credit can offset your income tax liability on a dollar-for-dollar basis (meaning you need tax liability to claim this credit), but any excess credit won’t be refunded. In the event the credit you qualify for exceeds your tax liability for the year, you can “roll over” the unused portion to future years so long as the credit remains in effect. 

[AR_CPA2]

Hello paulorco,

It is not a refundable credit.  This credit will reduce your tax and any leftover credit can be carried forward to a future year.  For more info:

https://www.energy.gov/eere/solar/homeowners-guide-federal-tax-credit-solar-photovoltaics#:~:text=Ge....

Hope it helps...

Have a wonderful day!!