What to Expect When Filing for the Federal Solar Tax Credit in 2025

Understanding the Federal Solar Tax Credit

The Residential Clean Energy Credit, commonly known as the federal solar tax credit, is a major financial benefit for homeowners who install solar panels. For 2025 filings (for systems installed in 2024), the credit allows you to deduct 30% of your solar installation costs from your federal taxes. This credit applies to both solar panels and related equipment, like inverters and battery storage.

This is a nonrefundable tax credit, meaning it reduces the taxes you owe to the federal government. If your credit exceeds your tax liability, the unused portion can be carried forward to the following year.For more details about the tax credit, visit the Department of Energy’s Homeowner’s Guide to the Federal Solar Tax Credit.

Step 1: Gather Your Documentation

Before filing, make sure you have all the necessary paperwork to support your claim.

📄 What you’ll need:

• Final invoices and receipts from your solar installer (Sunwise Energy provides this documentation upon project completion).
• Certification statements for the solar panels and related equipment. These confirm eligibility for the tax credit.
• Copies of your financing agreement (if applicable).

Why it matters: Having organized documents simplifies the filing process and reduces the risk of errors or delays.

For more information about eligible expenses, visit the IRS page on Residential Clean Energy Credits.

Step 2: Fill Out IRS Form 5695

To claim your solar tax credit, you’ll need to complete IRS Form 5695, also called the Residential Energy Credits form.

📋 Form Highlights:

• Part I is where you report your solar installation costs. This includes labor, equipment, and even certain upgrades like roofing (if required for solar installation).
• The form calculates your total credit, which is then transferred to your Form 1040 when filing your federal taxes.

Important Note: While Form 5695 is straightforward, Sunwise Energy recommends working with a tax professional to ensure accuracy. We are not tax experts and cannot offer specific tax advice.

Access the form directly here: IRS Form 5695 (PDF)

Step 3: Understand What Qualifies for the Tax Credit

The federal solar tax credit covers more than just solar panels. Here’s what’s included:

✅ Covered Costs:

• Solar panels and hardware (e.g., inverters, wiring).
• Battery storage systems like Tesla Powerwall or Enphase Encharge.
• Labor costs for on-site preparation, assembly, and installation.
• Upgrades to your electrical panel to support the system.
• Roof reinforcement (if required for solar installation).

❌ What’s Not Covered:

• General home improvements unrelated to solar.
• Portable solar equipment.

For more details, check out the IRS Guide to Form 5695.

Step 4: File Your Taxes and Claim the Credit

Once your Form 5695 is completed, it’s time to file your taxes. Here’s how the process works:

1. Complete Form 5695: Calculate your credit amount using the form.
2. Transfer to Form 1040: Report the credit on your federal tax return (Form 1040).
3. Submit Your Tax Return: File electronically or by mail before the 2025 tax deadline (typically April 15).

Why it matters: Filing accurately ensures you receive the full benefit of the solar tax credit without delays or complications.

For additional help, visit EnergySage’s Guide to the Solar Tax Credit.

What to Keep in Mind

• The solar tax credit is nonrefundable, meaning it can reduce your tax liability to $0, but you won’t receive a refund for any remaining credit.
• You can carry unused portions of the credit forward to the next tax year.
• Always consult with a tax professional to confirm your eligibility and ensure your form is filled out correctly.

Why Sunwise Energy Stands Out

At Sunwise Energy, we make the transition to solar seamless by providing:

• Transparent Documentation: You’ll receive all the paperwork you need for claiming the federal solar tax credit.
• Expert Support: Our team ensures your system meets all requirements for eligibility.
• Customer-First Approach: We’re here to answer questions—but we recommend consulting a tax professional for filing advice.

Ready to Save with Solar? Contact Sunwise Energy Today! 🌞

Switching to solar doesn’t just help the environment—it’s a smart financial move. If you’re ready to start saving, reach out today.

📞 Call us: (267) 888-2554 or (609) 400-0059
📅 Book Online: sunwiseusa.com