Tennessee Solar Tax Credit

Live in Tennessee and would like to install solar panels, but are worried that the upfront costs will be high? What if we told you that you could get 30% of your money back? Intrigued? Then read our article on how to claim Solar Tax Credit in Tennessee.

What is the Solar Tax Credit?

The Solar Investment Tax Credit (ITC) enables both businesses and homeowners to receive a tax credit equivalent to 30% of their solar panel system’s cost. Unlike a rebate, the ITC directly reduces the income tax.

This credit is accessible to those who install solar panels before December 31, 2034. The percentage gradually decreases to 26% in 2033 and 22% at the start of 2034.

How does the Tennessee Solar Tax Credit work in practice?

Consider a scenario where a household invests $20,000 in a solar panel system. With the ITC, they can subtract $6,000 from their income taxes, resulting in a net cost of $14,000 for the PV system. Any remaining credit can be carried over to subsequent years, ensuring the fulfillment of the promised 30% solar incentive.

To qualify for the ITC, ownership of the solar energy system is crucial—leased systems do not qualify. Installation must occur within the United States, and the solar PV system must be either new or used for the first time. For those seeking the credit for a PV installation on a boat or RV, consider designating it as a second home.

How do I get a solar tax credit in Tennessee?

The process involves claiming the credit after the solar system installation is complete. Maintain meticulous records of expenses related to the installation, including invoices, receipts, and documentation of qualified expenditures such as solar panels, inverters, mounting equipment, and labor costs. Although these documents don't need to be submitted, they may be required in the event of an audit.

April 15

most common National Tax Day date

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 on Schedule 3 (Form 1040) and file 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 Tennessee Solar Tax Credit

The scope of expenses covered by the Tennessee Solar Tax Credit extends beyond solar panels, encompassing all equipment, shipping, and labor costs. Notably, there is no cap on the amount that can be claimed back.

Beyond the federal solar tax credit, Tennessee offers additional state-level incentives and rebates, further reducing upfront costs for solar energy system installations. Explore more details in our comprehensive guide on Tennessee 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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