Vermont Solar Tax Credit

Live in Vermont and would like to install solar panels, but are worried it will be a very expensive and costly project? Going solar is easier with the greatest solar incentive – Investment Tax Credit. Here is a quick article on how to claim Solar Tax Credit in Vermont.

What is the Solar Tax Credit?

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

This credit is applicable to solar panel systems installed before December 31, 2034, with reductions to 26% in 2033 and 22% at the beginning of 2034.

How does the Vermont Solar Tax Credit work in practice?

Consider a household installing a $20,000 solar panel system; they can deduct $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% incentive.

To be eligible for the ITC, you must own the solar energy system, as leased systems do not qualify. The system must be installed in the United States, and if claiming for a PV installation on a boat or RV, categorize it as a second home.

How do I get a solar tax credit in Vermont?

Claiming the Solar Tax Credit involves submitting detailed records of installation-related expenses, such as invoices, receipts, and other documentation showcasing qualified expenditures.

April 15

most common National Tax Day date

Homeowners can claim the credit by completing IRS Form 5695, attaching it to their federal income tax return, and including residential energy credit information in Schedule 3 (Form 1040).

Need help? Follow our guide!

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

Step-by-step guide

Benefits of the Vermont Solar Tax Credit

The Vermont Solar Tax Credit extends beyond solar panels to cover all associated equipment, shipping, and labor expenses. Notably, there is no cap on the amount that can be claimed back.

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