Virginia Solar Tax Credit

Virginia is a perfect state for solar panels, but the upfront costs for their purchase and installation can be painful to the budget. To avoid this, 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 Virginia.

What is the Solar Tax Credit?

The Solar Investment Tax Credit (ITC) empowers businesses and homeowners to enjoy a 30% tax credit on the total cost of their solar panel system. Unlike rebates, the ITC directly reduces your owed income tax.

Act before December 31, 2034, to secure the full 30% credit. It gradually decreases to 26% in 2033 and 22% at the start of 2034.

How does the Virginia Solar Tax Credit work in practice?

Consider a $20,000 solar panel system installation. With the ITC, you can subtract $6,000 from your income taxes, lowering the net cost to $14,000. Any unused credit can be carried over to subsequent years, ensuring you reap the promised 30% incentive.

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To qualify for the ITC, the solar energy system must be owned, as leased systems do not qualify. The installation must be within the United States, and the solar PV system must be either new or used for the first time.

How do I get a solar tax credit in Virginia?

The process begins after your solar system is installed. Maintain detailed records of expenses related to the installation, such as invoices, receipts, and documentation of qualified expenditures.

As a homeowner, complete IRS Form 5695 and attach it to your federal income tax return. Include residential energy credit information on Schedule 3 (Form 1040) and file your return by the 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 Virginia Solar Tax Credit

This credit covers not only solar panels but also all associated equipment, shipping, and labor expenses. There's no cap on how much you can claim back.

Additionally, Virginia offers its own state-level incentives and rebates, complementing the federal solar tax credit. Explore more in our guide on Virginia 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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