Iowa Solar Tax Credit

Discover the ease of going solar in Iowa with the help of the Solar Tax Credit. Curious about the process? Here's a quick guide on securing the Solar Tax Credit in Iowa.

What is the Solar Tax Credit?

The Solar Investment Tax Credit (ITC) empowers businesses and homeowners to receive a tax credit equal to 30% of the total cost of a solar panel system. Unlike a rebate, this credit directly reduces the income tax you're obligated to pay.

This Solar Tax Credit is applicable to those installing solar panels by December 31, 2034, with the credit percentage gradually decreasing to 26% in 2033 and further to 22% at the beginning of 2034.

How does the Solar Tax Credit work?

The tax credit directly diminishes the amount of income tax owed to the federal government. For instance, if the cost of a solar system is $10,000, a 30% ITC would yield a tax credit of $3,000. This allows you to subtract $3,000 from your total income tax liability. If the tax credit exceeds your tax liability for the year, any surplus credit can often be carried over to the next year, ensuring you receive the full benefit.

To qualify for the Solar Tax Credit, ownership of the solar energy system is necessary: you purchased it with cash or through financing but you are neither leasing nor are in an arrangement to purchase electricity produced by a system you do not own, and the system must be new or used for the first time. Additionally, the installation must take place in the United States.

How do I get a solar tax credit in Iowa?

To claim the Solar Tax Credit, follow these steps after installing your solar system. Keep meticulous records of installation expenses. Complete IRS Form 5695 and include it with your federal income tax return. Add your residential energy credit details to Schedule 3 (Form 1040). Be sure to file your tax return by the relevant 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 Solar Tax Credit in Iowa

The Solar Tax Credit significantly reduces the cost of a solar installation, encompassing not only solar panels but also all equipment, shipping, and labor expenses. There's no cap on how much you can claim.

Beyond the federal solar tax credit, Iowa offers state-level incentives and rebates for solar installations, further easing the initial costs of establishing a solar energy system. Explore more in our guide on Iowa 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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