Rhode Island Solar Tax Credit

Decided to go solar in Rhode Island? Do it the smart way: take a look at the Investment Tax Credit – the greatest incentive available to solar owners – to make your purchase easier and more profitable. Here is a quick article on how to claim Solar Tax Credit in Rhode Island.

What is the Solar Tax Credit?

The Solar Investment Tax Credit (ITC) empowers both businesses and homeowners, allowing them to claim a tax credit equivalent to 30% of the solar panel system's cost. Unlike a rebate, the ITC directly diminishes the income tax owed.

Available until December 31, 2034, the Solar Tax Credit gradually decreases to 26% in 2033 and further to 22% at the start of 2034.

How does the Rhode Island Solar Tax Credit work in practice?

To illustrate, if a household invests in a $20,000 solar panel system, 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 the fulfillment of the promised 30% solar incentive.

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Eligibility for the ITC necessitates ownership of the solar energy system; leased systems do not qualify. Installation must occur within the United States, and the solar PV system should be new or used for the first time. For those seeking a credit for a PV installation on a boat or RV, designate it as your second home.

How do I get a solar tax credit in Rhode Island?

The process begins after the solar system installation. Maintain detailed records of all related expenses, such as invoices and receipts, to showcase qualified expenditures like solar panels, inverters, mounting equipment, and labor costs. While not required for submission, these records may be essential in case of an audit.

Homeowners can claim the Solar Tax Credit by completing IRS Form 5695 and attaching it to their federal income tax return. Ensure the inclusion of residential energy credit information in Schedule 3 (Form 1040) and file the 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 Rhode Island Solar Tax Credit

The scope of the Rhode Island Solar Tax Credit extends beyond solar panels, encompassing all associated equipment, shipping, and labor expenses. There is no cap on the claimed amount.

Additionally, complementing the federal solar tax credit, Rhode Island offers its own set of state-level incentives and rebates, further alleviating the upfront costs of installing a solar energy system. Explore our comprehensive guide on Rhode Island solar incentives for more information.

Julia Zaraeva

Author

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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