Federal Tax Credit for Plug-in Solar: How to Claim 30% Back

Everything you need to know about the Investment Tax Credit (ITC) for plug-in solar systems—and how to claim it on Form 5695.

The 30% Federal Tax Credit: Real Money Back

If you buy a plug-in solar system for $1,500 and qualify for the federal Investment Tax Credit (ITC), you get $450 back.

Not a rebate. Not a coupon. A dollar-for-dollar reduction in your federal income taxes.

This credit runs through 2032, and yes—plug-in solar qualifies. Here's exactly how it works.

What Is the ITC?

The Investment Tax Credit is a federal incentive designed to make renewable energy more affordable. It's been around for decades, but it was recently extended and expanded.

For solar, the ITC gives you a credit equal to 30% of your system cost. You claim it on your income tax return. The credit reduces your federal tax liability directly.

Key dates:

2022–2032: 30% credit for residential solar
After 2032: 26% (2033), 22% (2034), then expires

Since we're in 2026, you're looking at the sweet spot: 30% for the next six years.

Does Plug-in Solar Qualify?

Yes, but with conditions.

The IRS treats plug-in solar as "solar electric property." To qualify, your system must:

Generate electricity — Not heat water. Your plug-in panels (PV) qualify; solar thermal does not.
Be located at your primary or secondary US residence — Vacation homes count. Rental properties do not.
Meet UL standards — Your equipment must be UL-listed or equivalent. Until late 2026, most plug-in systems aren't yet UL 3700 certified. See the caveat below.
Be new, not used — You can't claim the ITC on a secondhand system.

The UL 3700 Wrinkle

Here's where it gets sticky: the IRS expects solar equipment to be UL 3700 certified. UL 3700 is the new standard for grid-interactive plug-in solar systems.

As of early 2026, no plug-in solar systems are yet UL 3700 certified. Products like Craftstrom, Bright Saver, and EcoFlow's PowerStream are in the certification pipeline, but certifications aren't expected until late 2026.

What does this mean for the ITC?

The IRS hasn't issued guidance yet on pre-certification systems. You have a few options:

Wait for UL 3700 certification (expected late 2026) — Once a major brand gets certified, you can buy with confidence.
Buy now and claim the credit anyway — Many experts believe the IRS will honor ITC claims for systems that meet the intent of the standard, even if UL certification came later. But this carries risk—the IRS could deny your claim.
Consult a tax professional — If you're buying a major system ($1,500+), the $450 credit is worth a $200 tax prep consultation to confirm.

We recommend option 1: wait. Certification is coming within months, and the uncertainty isn't worth the risk for what amounts to a few months of delay.

How to Claim the ITC: Form 5695

Once you own a UL 3700–certified plug-in solar system, claiming the ITC is straightforward.

Step 1: Calculate your credit

Multiplying system cost × 30%. That's your credit amount.

Example: $1,500 system × 30% = $450 credit.

Step 2: Complete Form 5695

Form 5695 ("Residential Energy Credits") is the IRS form for claiming solar credits. It's available on IRS.gov.

You'll fill in:

Date system was installed (or placed in service)
Cost of system
Your name and Social Security number
Calculate the credit (usually just the 30% amount)

Step 3: Include it with your tax return

Attach Form 5695 to your federal tax return (Form 1040). Many tax software packages (TurboTax, H&R Block, etc.) walk you through this automatically if you tell them you bought solar.

Step 4: Subtract from your tax liability

The ITC amount reduces what you owe the IRS. If you owe $2,000 in federal taxes and have a $450 solar credit, you now owe $1,550.

That's it. No application, no rebate form, no approval needed (assuming your system qualifies).

Common ITC Mistakes

Mistake 1: Claiming the credit in the wrong year

You claim the ITC in the year your system is "placed in service" (installed and generating power). If you buy in December 2026 but don't install until January 2027, you claim it on your 2027 taxes.

Mistake 2: Forgetting to include the credit at all

Surprisingly common. You buy the system, install it, then forget to claim it on taxes. The IRS won't remind you. Set a calendar reminder in December to ask your tax preparer or software about it.

Mistake 3: Claiming it as a dependent on a rental property

The ITC is for your primary or secondary residence, not rental properties. If you install a system on a rental, you can depreciate it under MACRS rules, but you can't take the ITC.

Mistake 4: Double-counting with state or local incentives

Some states (California, New York, Massachusetts) also offer solar rebates or tax credits. These stack with the federal ITC—you can take both. But make sure you understand how each is calculated. Don't let the state rebate reduce your federal basis.

What If Your Tax Liability Isn't High Enough?

Here's a nuance: the ITC reduces your federal tax liability, not your tax filing.

If you owe $300 in federal taxes but have a $450 solar credit, you can't just pocket the $150 difference. Instead, you owe $0 in taxes.

However, the ITC does carry forward. Any unused credit rolls into future years.

Example:

You buy a $1,500 system in 2026 (30% = $450 credit). You owe $300 in federal taxes in 2026. You use $300 of the credit to eliminate your tax bill. The remaining $150 credit carries to 2027 taxes.

In 2027, if you owe $500 in federal taxes, you use the remaining $150 credit, reducing your 2027 bill to $350.

This isn't ideal (you'd rather use the full $450 immediately), but it still works. Eventually, you'll use the full credit.

Residential vs. Commercial Property

The ITC is straightforward for residential properties. But what if you're borderline?

Primary home: Yes, claim it.
Second home (vacation property): Yes, claim it.
Rental property you live in part-time: Maybe—consult a CPA.
Rental property (investment only): No, you can't claim the ITC, but you can depreciate it.
Apartment building you own: No residential ITC, but there are commercial solar incentives.

When in doubt, ask a tax professional.

State and Local Credits (They Stack!)

Many states layer on additional incentives. These don't reduce your federal ITC—they stack.

California: Rebates through some utilities (declining). Also, California's state income tax has no solar credit, but there's no income tax on electricity savings (compared to other states).

New York: The state offers a 25% solar credit in addition to the federal 30%. You can claim both.

Massachusetts: Up to $1,000 state rebate, plus the federal ITC.

Texas: No state credit, but some utilities offer small rebates. Federal ITC is your main incentive.

Check your state's energy office or DSIRE (Database of State Incentives for Renewables & Efficiency) for what's available where you live.

The Bottom Line: When to Claim

Once plug-in solar systems earn UL 3700 certification (expected late 2026), you can confidently claim the ITC.

Until then, you have a decision:

Buy early and hope — Risk the IRS denying your claim (small, but real risk).
Wait a few months — Safe, but you miss out on generating power in the meantime.

We lean toward waiting, but talk to a tax professional if you're on the fence. The $450 credit is significant enough that a $200 consultation is worth the peace of mind.

Once you've installed your system and earned the credit, claiming it is simple: Form 5695, include with your tax return, and enjoy the savings.

Ready to understand the overall ROI? Check out how much you can save with plug-in solar and whether it's worth it in your state.