Overview
There are currently two main tax incentives available for homeowners who install solar energy systems: a federal tax credit and a state-level tax credit (in certain states like our state of Massachusetts). These incentives are designed to reduce the upfront cost of solar installations and encourage the adoption of clean, renewable energy. Each program has its own eligibility requirements, credit limits, and guidelines for claiming the benefit, making it important for homeowners to understand how they work in order to maximize their savings. Below are the current available tax credits, briefly outlined. Included are links directly to the source information to read more in depth about each.
MA State Residential Energy Credit
Massachusetts residents who own or rent and occupy as their principal residence can claim a personal income tax credit of up to 15% of net expenditures, with a maximum of $1,000, for installing qualified solar energy systems. Unused credits can be carried forward for up to three years to offset future personal income tax liability.
Read more here: https://www.mass.gov/regulations/830-CMR-6261-residential-energy-credit
Federal Residential Energy Credit
Homeowners can claim a 30% federal tax credit for the cost of installing solar energy systems on their main home in the U.S. The program will run from 2022 through 2032, with the credit decreasing to 26% in 2033 and 22% in 2034. The credit applies to both solar electric panels and solar water heaters, and it includes labor and installation costs. The credit is nonrefundable, meaning it can only reduce taxes owed, but unused amounts can be carried forward to future years. There is no annual or lifetime cap (except for fuel cells).
Read more here: https://www.irs.gov/credits-deductions/residential-clean-energy-credit
Disclaimer: E2 Solar is not a tax advisor. Please consult your tax professional to discuss your individual tax situation.