Illinois Solar Tax Credit

Going solar in Illinois is easier with the help of the Solar Tax Credit. Wondering how to get it? Here's a quick guide on claiming the Solar Tax Credit in Illinois.

What is the Solar Tax Credit?

The Solar Investment Tax Credit (ITC) lets businesses and homeowners get a tax credit worth 30% of the total cost of a solar panel system. Unlike a rebate, this credit directly lowers the income tax you have to pay.

This Solar Tax Credit applies to those installing solar panels by December 31, 2034. The credit percentage decreases to 26% in 2033 and then to 22% at the start of 2034.

How does the Solar Tax Credit work?

The tax credit directly lowers the amount of income tax owed to the federal government. For example, if the cost of a solar system is $10,000, a 30% ITC would provide a tax credit of $3,000. This means you can subtract $3,000 from your total income tax liability.

If the tax credit is more than your tax liability for the year, the extra credit can often be carried over to the next year, ensuring you get the full benefit.

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

How do I get a solar tax credit in Illinois?

To claim the Solar Tax Credit, follow these steps after installing your solar system. Keep detailed records of installation expenses. Fill out IRS Form 5695 and include it with your federal income tax return. Add your residential energy credit details to Schedule 3 (Form 1040). Make sure to file your tax return by the relevant deadline. Keep the receipts in case the IRS comes to visit.

Need help? Follow our guide!

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

Step-by-step guide

Benefits of the Solar Tax Credit in Illinois

The Solar Tax Credit lowers the cost of a solar installation, covering not just solar panels but also all equipment, shipping, and labor expenses. There's no limit to how much you can claim.

Besides the federal solar tax credit, Illinois offers state-level incentives and rebates for solar installations. These programs can further reduce the initial costs of setting up a solar energy system. Learn more in our guide on Illinois 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.

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