Delaware Solar Tax Credit

13 Dec 2023
4 min
Beginner

Andrey GorichenskiAuthor

Every homeowner who plans to go solar should know about the Solar Tax Credit. After all, this incentive lets you bring down the expenses by a third! In this article, we’ll learn how to claim Solar Tax Credit in Delaware in 2024.

What is the Solar Tax Credit?

The Solar Tax Credit, also known as the Investment Tax Credit (ITC), is a benefit provided by the US government to encourage investment in solar panel systems. It allows individuals and businesses to deduct a percentage of the cost of these systems from their federal income taxes, reducing the overall tax liability for those investing in solar energy.

How does the solar tax credit work?

The ITC enables solar energy system owners to claim a tax credit equal to 30% of the system's cost. For example, if a homeowner installs a $10,000 photovoltaic (PV) system, they can subtract $3,000 from their income taxes, bringing the net cost down to $7,000. This 30% credit rate is effective until December 31, 2034, after which it gradually decreases to 26% in 2033 and 22% in 2034. If the tax credit exceeds the individual's income taxes, the remaining credit can be carried over to the following year, ensuring the full benefit of the 30% incentive.

How do I get a solar tax credit in Delaware?

To qualify for the Solar Tax Credit in Delaware, you must own the solar energy system (not lease it) and ensure it is installed in the United States. Additionally, the system should be new or used for the first time.

April 15

National Tax Day

To claim the credit, keep detailed records of all expenses related to the solar system installation, such as receipts and invoices for solar panels, inverters, mounting equipment, and labor costs. Although you won't need to submit these records with your taxes, it's advisable to keep them safe in case of an audit.

You can claim the Delaware Solar Tax Credit by completing IRS Form 5695 and attaching it to your federal income tax return. Include your residential energy credit information on Schedule 3 (Form 1040), and make sure to file your tax return by the applicable deadline.

Need help? Follow our guide!

We cover filling out the forms for claiming ITC step by step

Step-by-step guide

Benefits of the Delaware Solar Tax Credit in Delaware

The Solar Tax Credit helps reduce the cost of a solar installation by a third. This credit not only covers the solar panels but also includes all the equipment, shipping, and labor expenses. The good news is that there's no limit to how much you can claim back.

In addition to the federal solar tax credit, Delaware offers its own state-level incentives and rebates for solar installations. These additional programs can make installing a solar energy system even more affordable. You can find more details in our guide on Delaware solar incentives.

Andrey Gorichenski

Senior Editor

Andrey had been a news editor and freelance writer for a number of medias before joining A1SolarStore team. Climate change and its impact on people's lives has always been among his interests and it partially explains his degree in Philosophy and Ethics.