Minnesota Solar Tax Credit

Discover how simple it is to switch to solar power with the help of the Solar Investment Tax Credit. Wondering how it works? Check out this easy guide to getting the Solar Tax Credit in Minnesota.

What is the Solar Tax Credit?

The Solar Investment Tax Credit (ITC) allows businesses and homeowners to receive a tax credit equal to 30% of the cost of a solar panel system. Unlike a rebate, the ITC directly reduces the amount of income tax owed. The Solar Tax Credit is available for anyone installing solar panels before December 31, 2034, with a reduction to 26% in 2033 and further to 22% at the beginning of 2034.

How does the Minnesota Solar Tax Credit work in practice?

Let’s set an example: if a household installs a $20,000 solar panel system, they can subtract $6,000 from their income taxes. The net cost of a PV system goes down to $14,000 in that case. Any remaining credit can be carried over to subsequent years.

How do I get a solar tax credit in Minnesota?

Claiming the Solar Tax Credit happens after the solar system is installed. Keep detailed records of the installation expenses, including invoices, receipts, and other documentation showing qualified expenditures like the cost of solar panels, inverters, mounting equipment, and labor costs. While you won't need to submit them, they may be necessary in case of an audit.

To qualify for the ITC, ownership of the solar energy system is necessary — leased systems do not qualify. The solar energy system must be installed in the United States and must be new or used for the first time. If you want to claim for a PV installation on your boat or an RV, designate it as your second home.

To claim the Solar Tax Credit as a homeowner, complete IRS Form 5695 and attach it to your federal income tax return. Add your residential energy credit information to Schedule 3 (Form 1040) and file your tax return by April 15 which is National Tax Day in the US.

Need help? Follow our guide!

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

Step-by-step guide

Benefits of the Minnesota Solar Tax Credit

The cost reduction from the Minnesota Solar Tax Credit includes not only solar panels but also all associated equipment, shipping, and labor expenses. There's no cap on how much you can claim back. In addition to the federal solar tax credit, Minnesota offers its own state-level incentives and rebates for solar installations, further reducing the upfront costs of adopting a solar energy system. Explore more in our guide on Minnesota 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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