South Dakota Solar Tax Credit

South Dakota is a nice state to install solar panels, generate energy, and enjoy saving your family budget. To make the purchase easier from the start, take advantage of the greatest incentive available to solar owners – Investment Tax Credit. Here is a quick article on how to claim Solar Tax Credit in South Dakota.

What is the Solar Tax Credit?

The Solar Investment Tax Credit (ITC) empowers businesses and homeowners to claim a tax credit amounting to 30% of the expenditure on a solar panel system. Unlike a rebate, the ITC directly reduces your income tax.

This credit is accessible to those who install solar panels before December 31, 2034, with a gradual reduction to 26% in 2033 and 22% at the onset of 2034.

How does the South Dakota Solar Tax Credit work in practice?

Consider a household investing $20,000 in a solar panel system; they can deduct $6,000 from their income taxes. Consequently, the net cost of the PV system becomes $14,000. Any remaining credit can be carried over to subsequent years, ensuring you reap the full 30% promised by this solar incentive.

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To qualify for the ITC, ownership of the solar energy system is a must; leased systems do not meet the criteria. The installation must take place in the United States, and the solar PV system should either be new or used for the first time. If you're looking to claim for a PV installation on your boat or RV, categorize it as your second home.

How do I get a solar tax credit in South Dakota?

The Solar Tax Credit can be claimed post-installation of the solar system. Keep meticulous records of all expenses related to the installation, such as invoices, receipts, and other documentation showcasing qualified expenditures like solar panels, inverters, mounting equipment, and labor costs. While not mandatory for submission, these records may be essential in case of an audit.

To claim the Solar Tax Credit as a homeowner, complete IRS Form 5695 and attach it to your federal income tax return. Ensure you include your residential energy credit information on 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 South Dakota Solar Tax Credit

The cost reduction facilitated by the South Dakota Solar Tax Credit encompasses not just the solar panels but also all associated equipment, shipping, and labor expenses. The beauty of it? There’s no cap on how much you can claim back.

Additionally, South Dakota offers state-level incentives and rebates for solar installations, complementing the federal solar tax credit. Explore more in our comprehensive guide on South Dakota solar incentives.

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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