If you installed solar panels in 2025, good news, you could be eligible for a 30% federal tax credit that can significantly reduce what you owe on your taxes. But claiming the Federal Solar Investment Tax Credit (ITC) involves a bit of paperwork and planning.
This guide walks you through everything you need to know, from eligibility requirements and what documents to collect, to filling out IRS Form 5695 and combining your federal credit with state-level incentives.
Eligibility Checklist: Do You Qualify for the 2025 Solar Tax Credit?
Before diving into the paperwork, make sure you meet the following conditions:
- You own the solar system (not leased)
- It was installed and operational in the 2025 tax year
- It’s located at your U.S. primary or secondary residence
- You owe enough federal taxes to use the credit (it’s non-refundable)
- It’s a new installation (not a reinstallation of used equipment)
What Documents Should You Prepare?
To support your claim, gather and keep the following:
- Final contract and payment receipts from your solar installer
- Proof of the date the system was placed in service (e.g., final inspection or PTO letter)
- Itemized invoice showing costs of panels, inverters, batteries, mounting hardware, and installation labor
- Any utility interconnection approval letters or rebate documentation
Remember to keep a digital and physical copy in case the IRS requests additional proof.
How to Fill Out IRS Form 5695 (Residential Energy Credits)
Form 5695 is how you claim the ITC on your federal return. It sounds intimidating, but it’s fairly straightforward.
Step-by-Step:
- Download IRS Form 5695 and instructions from irs.gov.
- Go to Part I, Line 1 – enter your total qualified solar installation costs.
- Complete the calculations on Lines 6a through 13 to determine your 30% credit.
- Transfer the final credit amount to Form 1040, Schedule 3, Line 5.
For Example, if your total solar installation cost is $25,000, your 2025 tax credit is $7,500.
Can You Combine Federal and State Incentives? Here’s How
You can absolutely stack state-level incentives with the federal credit to reduce your net cost even further.
- Some states offer rebates, performance-based incentives, or sales/property tax exemptions.
- However, state rebates may reduce the total eligible cost for your federal credit – check your state’s rules.
Examples:
- New York: NY-Sun rebate + ITC
- California: SGIP rebate for batteries + ITC
- Massachusetts: SMART performance incentive + ITC
Not sure what applies in your state? Our team at Lucent Energy can help identify all eligible savings.
Don’t Miss These Filing Tips
- File in the same tax year your system was placed in service
- If you don’t owe enough taxes this year, carry over the unused portion to future years
- Use a tax preparer or software if you’re unsure; many tools now support solar tax forms
Conclusion: The 30% Tax Credit is Yours, Just Claim It Right
With the 2025 solar tax credit still holding strong at 30%, homeowners have a golden opportunity to save thousands. A little prep and paperwork is all it takes to earn these savings and make your clean energy investment even smarter.
Need help getting started? Lucent Energy not only installs high-efficiency solar systems, we help you understand and maximize every available incentive.
FAQ: Claiming the Solar Tax Credit in 2025
Yes, as long as you own the system (not a lease or PPA). Financing doesn’t affect your eligibility.
You can roll over the unused portion to future tax years.
Yes, in 2025 battery storage qualifies, even if installed separately, if it’s charged primarily by solar.
Only if you installed the system on a home you owned and lived in during the year it was placed in service.
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