Residential Clean Energy Credit Calculator
Calculate the 30% federal Residential Clean Energy Credit on home solar, battery, geothermal, and wind installations.
What Qualifies for the 30% Credit
The Residential Clean Energy Credit (Section 25D) covers: (1) solar electric panels (PV), (2) solar water heating, (3) battery storage technology of 3 kWh+ capacity, (4) geothermal heat pumps, (5) fuel cells, (6) small wind turbines for residential use. The credit equals 30% of total installed cost INCLUDING labor — no cap except your tax liability. Effective 2022-2032; drops to 26% in 2033 and 22% in 2034. Source: IRS Section 25D (Inflation Reduction Act, OBBB modifications). Last updated: May 2026.
How Rebates Affect the Credit
Utility rebates and state government rebates received reduce your cost basis for the federal credit. Example: solar costs $30,000, state rebate $4,000 → federal credit applies to $26,000 × 30% = $7,800. Cash rebates from the SELLER (manufacturer or installer) usually don't reduce basis — clarify with installer. Read carefully — many quotes confuse 'rebate' and 'discount' for tax purposes.
Non-Refundable but Unlimited Carryforward
The credit is non-refundable — can reduce tax to zero but won't generate a refund. However, any unused credit carries forward indefinitely until you have enough tax liability to absorb it. Retirees with low tax liability often spread the credit over 2-3 years. Cannot transfer to dealer/installer — only the homeowner can claim it.
Energy-Efficient Home Improvement Credit (Separate)
Section 25C is a DIFFERENT credit for energy-efficient appliances and equipment: heat pumps, insulation, windows, doors, electric panels. Annual cap of $3,200. Don't confuse with 25D — Section 25C has lower percentages and tighter caps but covers more product categories. Some installations qualify for BOTH (heat pump water heaters often).
Frequently Asked Questions
What is the Residential Clean Energy Credit?
A 30% federal tax credit on the cost of solar, battery, geothermal, and other clean energy installations on your home. Codified in IRS Section 25D. Available 2022-2032 at 30% rate, then phases down.
Is the 30% solar tax credit refundable?
No \u2014 non-refundable. It can reduce your federal tax to zero but won't generate a refund. Unused credit carries forward to future years indefinitely until consumed. This matters for low-tax-liability households (retirees, low-earners) who may need 2-4 years to use the full credit.
Does the credit cover battery storage?
Yes since the Inflation Reduction Act of 2022. Battery storage with at least 3 kWh capacity qualifies for the 30% credit, EVEN IF not paired with solar. Standalone battery systems are credit-eligible \u2014 useful for grid-tied battery backup.
Can I claim the credit on a rental property?
Generally no \u2014 must be your principal residence or second home you live in. Rental properties qualify under Section 48 (Investment Tax Credit) instead, which is for business properties. Section 25D is residential-only.
How do I claim the solar tax credit?
File IRS Form 5695 (Residential Energy Credits) with your tax return. Keep documentation: invoice showing breakdown of equipment and labor, installer certification of system specs, dates of installation. The credit flows to your Form 1040 Schedule 3.
Can I sell my house and transfer the credit?
No. The credit goes to the original homeowner at time of installation. If you sell with unused carryforward, the carryforward is lost. Plan installation timing relative to potential moves.