Compute the 30% federal residential clean energy credit on a solar PV system through 2032. Includes panels, inverter, battery storage, installation labor, and state-credit stacking.
Detailed instructions, formula notes, and US-context guidance shown in the calculator above.
Disclaimer: Estimate only. Consult a qualified professional for decisions with major financial, legal, or health consequences.
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📋 How to use this calculator
- Enter your installed solar PV system cost — panels, inverter, racking, labor, permits.
- Add battery storage cost (3 kWh+ qualifies as of 2023, including standalone batteries).
- Add any roof reinforcement or structural work directly required for the install.
- Select your federal marginal tax rate — the credit reduces dollar-for-dollar at this rate.
- Add state solar incentives if applicable (CA SGIP, MA SREC, NY-Sun, etc.) — stacks with federal.
- Review the 30% federal credit (Form 5695), state credits, and net out-of-pocket.
🧮 IRA Section 25D Residential Clean Energy Credit
Credit = 0.30 x (PV_system + Battery + Labor + Permits + Required_roof_work)
- Eligible cost: total system cost minus utility rebates
- Battery storage: 3 kWh+ capacity qualifies (including standalone post-2022)
- Credit rate: 30% through 2032, then 26% in 2033, 22% in 2034, 0% in 2035
- Non-refundable: caps at your federal tax liability, but excess carries forward indefinitely
- Primary residence OR second home (not rentals) — both qualify
No cap on the credit amount. Subtract utility rebates BEFORE applying the 30%. Net metering credits don't reduce the basis. Roof replacement only qualifies if structurally required (e.g., aging roof can't support panels) and only the structural portion, not aesthetic re-shingling.
💡 Worked example: 12 kW solar + 10 kWh battery in Arizona
Given:- Solar PV system: $28,000 (12 kW at ~$2.33/watt installed)
- Tesla Powerwall (13.5 kWh): $11,500 installed
- Permits + interconnection: $1,500
- Total eligible cost: $41,000
- Utility rebate (SRP/APS): $0 (no current rebate in 2026)
Steps:- Federal credit = 30% x $41,000 = $12,300
- Form 5695 claim against current year tax liability
- If federal tax owed < $12,300, excess carries forward to next year(s)
- Arizona state credit: 25% up to $1,000 = $1,000
- Net effective system cost: $41,000 - $12,300 - $1,000 = $27,700
Result: $13,300 in stacked tax credits. 33% reduction in net cost — payback period typically 6-9 years at AZ utility rates with battery backup against grid outages.
❓ Frequently asked questions
Is the solar tax credit refundable?
No — it's non-refundable, meaning it reduces your tax liability to zero but won't refund excess. However, unused credit CARRIES FORWARD indefinitely (no expiration) to future tax years. So a $12,000 credit with only $7,000 in tax liability uses $7,000 this year and carries the remaining $5,000 to next year. Practically, most homeowners eventually use the full credit within 1-3 years.
Can I claim the credit if I'm leasing solar (PPA or solar lease)?
No. The credit goes to the OWNER of the system. Under a Power Purchase Agreement (PPA) or solar lease, the installer (Sunrun, SunPower, etc.) owns the system and takes the credit themselves. You pay them a monthly fee for the electricity. If you want the credit personally, you must purchase the system outright (cash or solar loan).
Does roof replacement qualify?
Only the STRUCTURAL portion required by the installer. If your roof is at end-of-life and the solar company won't install on it, the structural reinforcement needed for the panel system can be included. The aesthetic re-shingling (new asphalt shingles) does NOT qualify. Get a written statement from the installer specifying which roof work is solar-required.
What's the difference between Section 25D (residential) and Section 48 (commercial)?
Section 25D: Residential, homeowner-owned, non-refundable credit, indefinite carryforward, 30% through 2032. Section 48 (Investment Tax Credit / ITC): Commercial or third-party owned residential (TPO/PPA/lease), business-claimed, refundable in some cases (direct pay for tax-exempts), 30% base with adders for domestic content, low-income, energy communities. PPA companies take Section 48.
Battery without solar — does standalone storage qualify?
Yes. As of 2023 (IRA expansion), standalone battery storage with at least 3 kWh capacity qualifies for the 30% Section 25D credit even WITHOUT solar PV. This includes Tesla Powerwall, Enphase IQ Battery, FranklinWH, etc. installed for resilience (grid outage backup) rather than solar-pairing. The credit applies to the same eligible costs: hardware + installation labor.
📚 Sources & references
Last updated: May 23, 2026