North Carolina Solar Tax Credit

North Carolina gets enough sunlight to make solar panels pay your electricity bills and save money. Don’t let the upfront investments scare you — take advantage of the Investment Tax Credit. Here is a quick article on how to claim Solar Tax Credit in North Carolina.

What is the Solar Tax Credit?

The Solar Investment Tax Credit, or ITC, empowers businesses and homeowners to receive a tax credit amounting to 30% of the solar panel system's cost. Unlike a rebate, the ITC directly reduces your owed income tax.

This tax credit is applicable to those who install solar panels before December 31, 2034. It gradually decreases to 26% in 2033 and further to 22% in the early part of 2034.

How does the North Carolina Solar Tax Credit work in practice?

Consider this scenario: A household invests in a $20,000 solar panel system. With the ITC, they can subtract $6,000 from their income taxes, ultimately reducing the net cost to $14,000. Any remaining credit can be carried over to subsequent years, ensuring you realize the promised 30% benefit.

For eligibility, ownership of the solar energy system is crucial — leased systems do not qualify. The system must be installed in the United States and should be either new or used for the first time. If you're looking to claim for a PV installation on your boat or RV, designate it as your second home.

How do I get a solar tax credit in North Carolina?

The Solar Tax Credit is claimed after the solar system installation. Keep meticulous records of installation-related expenses, including invoices, receipts, and other documentation. While not initially required, have these records on hand in case of an audit.

April 15

most common National Tax Day date

To claim the credit as a homeowner, complete IRS Form 5695 and attach it to your federal income tax return. Ensure your residential energy credit information is added to Schedule 3 (Form 1040), and 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 North Carolina Solar Tax Credit

The Solar Tax Credit in North Carolina covers not only the cost of solar panels but also includes equipment, shipping, and labor expenses. There is no cap on the amount you can claim back.

In addition to the federal solar tax credit, North Carolina offers its own state-level incentives and rebates for solar installations, further reducing upfront costs. Explore more in our comprehensive guide on North Carolina solar incentives.

Years of experience in translation and a love of nature help Julia find the right words to encourage going solar. She joined the team in 2023 and is happy to make her contribution to a greener future.

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