How to Claim the Solar Tax Credit (IRS Form 5695)

The federal solar tax credit (the Residential Clean Energy Credit) is claimed on your federal tax return using IRS Form 5695. This guide walks through the process at a high level.

Verify first: residential solar credit rules changed in recent legislation. Confirm the current percentage, eligibility and deadlines with the IRS and a tax professional before relying on any figure here. This is educational, not tax advice.

Step 1: Confirm you qualify

Historically you needed to:

• Own the system (bought with cash or a loan) — not lease or PPA. See financing options.
• Have it installed at a US home you live in.
• Have enough tax liability to use the credit (or carry it forward).

Step 2: Gather your numbers

• Your total eligible system cost (equipment + installation + permitting).
• Any battery storage cost that qualifies.
• Records/receipts from your installer and proof the system was placed in service.

Step 3: Fill out IRS Form 5695

• Enter your qualified solar costs in the Residential Clean Energy Credit section of Form 5695.
• The form calculates your credit (historically 30% of eligible cost).
• If your credit is larger than this year’s tax bill, the remainder can generally carry forward to future years.

Estimate the number first with our Solar Tax Credit Calculator.

Step 4: Carry the result to your 1040

• The credit from Form 5695 flows to Schedule 3, then to your Form 1040.
• It reduces the federal income tax you owe, dollar-for-dollar.

Common questions

• Is it a refund? No — it’s a non-refundable credit that reduces tax owed, with carryover of any excess.
• Do state incentives affect it? Sometimes. Some state rebates reduce the cost basis used for the federal credit. Look up state programs on DSIRE.
• Leased system? The third-party owner claims the credit, not you.

Bottom line

Owning your system and filing Form 5695 is how you capture the federal credit. Because the rules move, confirm the current details with the IRS and a tax pro — then see the bigger picture in our solar tax credit guide.

Educational information only, not tax advice.